At the recent D8 conference, Steve Jobs said the PC industry would be minimized in favor of touchscreen devices. Well, if it's going to happen, it isn't happening yet. Forrester Research has just released some new projctions showing strong future growth across the PC industry; tablets included. Their report says that over the next five years, PC sales will increase by 52%. The only category of computers set to see a decline is the venerable desktop PC.
Forrester also points out the increases in sales of tablets will likely cannibalize netbook sales, bypassing them in 2012. The report claims that tablets will account for 23% of computing device sales by 2015. While the desktop may be declining in 2015, Forester claims they will still be used by more consumers than any other variety of computer. If Forrester is correct, we can all cling to our desktops for just a little longer.
PC vendors were hoping that the launch of the much anticipated Windows 7 would result in a sales boost. The first reports from those vendors, however, are not painting a very rosy picture. Most vendors report only modest increases in sales.
We know that sales of standalone upgrade licenses for Windows 7 were very good at launch, but it seems not many people went out to get a new PC. Vendors are not expecting sales to pick up in 2009. This may be due, in part, to the fact that Vista users can easily upgrade their existing hardware to the lighter weight Windows 7.
Some notebook manufacturers produced extra units running Windows 7 in anticipation of high demand. With demand ending up weaker than expected, these PCs end up discounted. Expect PC prices to continue to slide. Good for us, not so much for the manufacturers and vendors.
Netbooks really help the overall sales figures for PCs, but as it turns out, they aren’t so great for the bottom line. It’s the highly attractive price of netbooks that keeps them in high demand. This might actually be a negative trend for PC makers, according to market research firm, DisplaySearch.
John Jacobs, director of notebook research for DisplaySearch, said, “…the lower [average selling price (ASP)] of these devices are clearly having a negative impact on portable PC market revenue. For 2009, we expect continued ASP erosion across all portable computer categories, leading to the first [year-over-year] decline of portable computer revenue.” Netbooks are currently responsible for a staggering 21.5% of PC shipments. Even with these unit numbers, they only make up 10.9% of revenue.
Sales prices of full size notebook computers have been pushed down considerably by the netbook bonanza. Notebook prices are down 10% in the last year. This may be an unsustainable trend in the PC market. The trend is, however, expected to continue next year.
We can't imagine anticipation running any higher for the imminent release of Windows 7 than it already is -- anyone hosting or attending a launch party? -- and rightfully so, given that the OS seemingly combines the best of XP and Vista while getting rid of most of the negatives. However, don't expect Windows 7 to save a struggling PC market from sluggish sales.
So says Steve Ballmer, who during a news conference in Munic, Germany, downplayed the role of Windows 7 in any PC sales increase that may follow.
"There will be a surge of PCs but it will probably not be huge," Ballmer told the audience, according to Reuters. Ballmer also went on to suggest that the ailing tech sector would take some time to rebound into old form.
Ballmer could be playing the karma card, as he seems intent on tempering expectations for Windows 7, while at the same time he and Microsoft's marketing gurus have entered a massive campaign to promote the upcoming OS. Amid all the hoopla, Microsoft even offered a 90-day trial of Windows 7 to enterprise users in an attempt to entice them into upgrading.
Then again, who knows what goes on in Ballmer's head - see here.
Sales of PCs were up in the second quarter of 2009, according to market analytics firm, iSupply. Global shipments were up 1% over the first quarter to 67.2 million units. This is the first increase in six months. It’s not all roses though; sales were still down 4.3% from Q2 of last year. However, going into the end of the year, sales are expected to stay strong in part due to the October release of Windows 7. The likely advertising blitz will get PCs in many mainstream media outlets.
In this past quarter, HP managed to hold the top sales spot for the twelfth quarter in a row. HP’s sales were up 2% over last quarter, leaving it with a 20% market share. "HP is not only maintaining its leadership position but is also gaining market share due to its robust notebook business, which has outgrown the overall notebook segment for the past two quarters," said Matthew Wilkins, principal analyst for iSuppli. Dell and Acer continued to fight it out for the number two spot.
Even Gartner’s numbers confirmed that the PC market didn’t decline as sharply as was expected. Gartner had feared a very steep decline of 9.8%, but its crystal ball eventually turned out to be way off the mark. According to Gartner, PC shipments declined by 5%.
IDC expects the PC market to put its horror run behind by the end of 2009. "New product launches in the second half of the year combined with seasonal growth and greater economic confidence resulting from factors such as government stimulus, a more liquid housing market, relatively stable stock market and interest rates, and progress in the auto and financial industries, should support the expected return to growth by year-end,” said Loren Loverde, the program director for IDC's PC tracking unit.
At the moment it is difficult to write about major financial developments in any industry without going on a frenzied hunt for words that can adequately describe the prevalent gloom. However, facts have a tongue of their own and at times don’t need to be underpinned by forceful words. Talking of facts, the previous quarter was the worst in the past six years in terms of PC sales.
PC sales data for the last quarter released by two of the leading market research firms, IDC and Gartner, paints a very grim picture. PC sales defied all expectations during the recently concluded holiday season and registered a trough. According to Gartner, PC sales only grew by 1.1 percent in the fourth quarter. But if data released by IDC is to be believed, then there was a depreciation of 0.4 percent.
Microsoft had predicted a growth of 10 percent to12 percent during the fourth quarter. The sharp drop in PC sales might have a huge impact on Microsoft’s own quarterly results.