The PC market continued to muddle through as shipments declined once more in the second quarter, with computers as a whole proving no match against the unrelenting popularity of smartphones and tablets in the consumer battleground, according to a new Compute Platforms report from IHS.
Total PC shipments reached 74,4-million units during the April to June period, as presented in the figure, down a steep 13% from the same time a year ago—the largest drop so far of the last eight quarters. The last time the industry saw year-over-year growth take place was in the first quarter of 2012 when a 4% expansion took place.
On a sequential basis the decline was less severe with shipments down 3%. But during this time last year, second-quarter 2012 shipments had been up 1% from their first-quarter levels, so the loss is also a setback even if the contraction was in the single digits.
The PCs covered by the count include desktops, laptops and entry-level servers. Mobile PCs continued to make up the largest part of total shipments, equivalent to 61%. Meanwhile, desktops accounted for 36% while entry-level servers took up the remaining 3%.
Only the entry-level server segment showed growth, up on both a sequential and annual basis. In comparison, the desktop PC and mobile PC sectors posted declines in both quarterly and yearly shipments from previous levels.
PCs have reached a point in time in which the machines have to prove that they still remain valid to the consumer, IHS believes. While no one disputes that computers will continue to exist, sales have been discouraging and consumers have defected in droves to smartphones and tablets instead—devices considered as more portable and appealing.
Last year overall PC shipments were down for the first time in 11 years, and 2013 appears headed for decline as well.
This is because both desktop and laptop segments have had a dismal first half, and projected shipments for the remainder of the year are not strong enough to overcome the deficit acquired by the market during the first six months of 2013. Meanwhile, the entry-level server sector is too small even with its positive growth to compensate for the failings of the two other larger PC segments.
Pockets of hope exist in the market, however, moving forward.
In desktops, for instance, Microsoft is ending support next year for Windows XP, so customers that have been on the fence about upgrading to Windows 8 may just have to do so.
Such a move, in turn, is likely to spur new-PC purchases because old machines are not able to handle the new operating system. And despite the allure of smartphones and tablets with their PC-like functions, those devices cannot completely replace PCs because they lack the computers’ much broader functionalities – further evidence that desktops can remain relevant.
In the case of laptops, which can compete more favourably with smartphones and tablets because of their mobile form factor, the advent of new ultrathin and ultrabook laptops could help persuade new users to give them a try and help bolster the overall PC market in the process. The main obstacle is the high price of ultrathins, which can easily reach thousands of dollars.
China could also be an important piece of the puzzle. The desktop market there continues to have strong potential given the relative under-penetration of computing technology in that vast East Asian country, especially in the rural countryside.
Meanwhile, great swathes of a newly emerging Chinese middle class are also ready to upgrade to mobile PCs and keep up with the rest of the world, providing impetus for the mobile segment that eventually redounds to the global PC trade.