The PC Market is Shrinking Fast

IDC and Gartner reported their separate views of the state of the PC market for the first calendar quarter of 2013. They agree that the PC market is shrinking, quickly.

According to IDC, the PC market suffered its worst year over year decline in the history of its tracking study. It estimates that the global PC market shrank nearly 14% and that the U.S. PC market shrank nearly 13%. (Gartner estimates are -11.2% and -9.6% respectively.) They both agree that HP lost a lot of marketshare, Dell lost some, and Lenovo, Toshiba, and Apple gained some marketshare. Lenovo, in particular, managed to grow within a shrinking market.

If Microsoft's Windows 8 operating system had any impact it wasn't helpful. By definition a shrinking PC market, particularly one with Apple gaining marketshare, means a shrinking Microsoft since so much of its business is dependent on the twin Microsoft Windows and Microsoft Office franchises. Microsoft also has other business units, but those two are essential to its continued success. I can't imagine Microsoft CEO Steve Ballmer being happy with what's happening to the PC market his company dominates.

What's going on? Simple: smartphones and tablets. Google and Apple supply the two most popular mobile platforms. Those devices are killing off much of the PC market. Smartphones and tablets are simply more relevant to more people in more places than PCs, and the mobile client application ecosystems are now stronger. It's astonishing, really. And what's really scary if your business is heavily dependent on PCs is that most of the world's population will never buy a PC but almost everybody on the planet has a mobile phone. Mobile phones are literally more popular than toilets. And smartphones are rapidly eroding the remaining market for feature phones. If it hasn't happened yet, this year (2013) is when the number of active smartphones and tablets will surpass the number of PCs, and it won't take long for tablets and smartphones to outnumber PCs by billions.

Naturally Microsoft isn't happy with this turn of events and has even filed a complaint with the European Commission, which strikes me (and a lot of other people) as absurd. Google and Apple simply built better business models and more compelling platforms than Microsoft, and that's why they're doing well (and should do well).

So what does the continuing rise of smartphones and tablets have to do with mainframes? Plenty. I continue to hear from mainframe users that transaction volumes and associated batch processing are growing faster than they expected, and that's mostly explained by smartphones and tablets. Mobile users are inherently more demanding users in terms of time and place, and consequently they expect continuous or near-continuous service with excellent security. Mobile users often generate wilder swings in application usage patterns — a simple Tweet could easily trigger (twigger?) a sudden spike in demand. Do those requirements sound familiar?

I don't predict the death of the PC, however. I'm just not sure yet where the PC market will stabilize.

UPDATE: ZDNet has posted an incredible chart showing what's happening to the PC market along with some more commentary. Wow.

by Timothy Sipples April 11, 2013 in Analysts, History
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