1 Simple Chart That Proves the PC is Dead
Filed under: Shopping, Technology
By Evan Niu, CFA
The Motley Fool
Stop me if you've heard this one before: the PC is dead. This has been a recurring debate in the tech world for years. Plenty of digital ink has been spilled right here on Fool.com trying to prove and disprove that notion. Investors would be surprised at how much has actually happened over the past three to four years.
Apple (NASDAQ: AAPL) has proclaimed that we're now entering the "Post-PC" era, but Microsoft (NASDAQ: MSFT) thinks it's more like "PC-Plus." I'll show you one simple chart that proves the PC is dead.
Three for the price of one!
First, I have a little confession to make. I've misled you a tiny bit; there's actually more than one chart for us to go through, but don't worry, we'll get to it. I've compiled four years of quarterly historical data from IDC on the smartphone, tablet, and PC markets and created a handful of charts to make my case.
These are worldwide PC unit shipments over the past four years:
I know what you're thinking right now: "Reports of the PC's death are greatly exaggerated." Sure, the PC market isn't growing like it used to, and total unit shipments in 2012 came in at 352.4 million. That's still a big market any way you slice it, and units were down only 3.2% from the 363.9 million units that were moved in 2011. "Death" may seem a little dramatic for an annual decline of "just" 3.2%.
The previous chart is not the problem, though. This one is:
Source: IDC.
While the overall PC market is down marginally, smartphone and tablet units have absolutely exploded. If you think about the computing landscape today, these three categories of devices represent the primary ways in which people compute and connect. Back in 2009, PCs really were the dominant form factor used in computing, and the smartphone market was still nascent and a relatively niche segment of the broader mobile phone market, even after Apple revolutionized the industry in 2007 with the iPhone.
There's much debate over how viable an alternative tablets currently are to PCs, but this is a classic textbook case of disruption happening before our very eyes, where a new technology invades from below before it can satisfy mainstream performance needs. Over time, the new technology improves on performance and moves up-market once it reaches performance parity (usually with cost advantages), causing the incumbent technology to retreat upwards into higher-performance niche segments.
This is the true threat to the PC, as widespread global adoption of smartphones and tablets can arguably replace the PC for most users' casual needs. Soon, tablets will replace most consumer PCs. The first sign that this is happening will be extended upgrade cycles, followed by minimal consumer PC upgrades. PCs will always have a place in enterprise and higher-performance professional segments, but the mainstream consumer is shifting to mobile -- fast.
If we look at the broader market for computing devices through this lens, the PC's share has absolutely plunged. This is the chart that proves that the PC is indeed dead.
Source: IDC.
At the beginning of 2009, the PC comprised nearly two-thirds of all computing devices, with the rest being smartphones. Then Apple introduced the iPad in Q2 2010 and jump-started the tablet market, which has now grown to 122.6 million units in 2012. In less than three years, the tablet market is now already a third of the PC market in unit terms.
Mobile device adoption shows no signs of slowing down, and now PCs are just a quarter of all computing devices sold today. That's an incredible decline in the PC's share of the computing market over the span of just four years. This is what people are talking about when they refer to the death of the PC.
One for the road
How do Apple and Microsoft play into all of this?
Microsoft continues to dominate the PC landscape. Linux market share tends to hover around 1% and Apple was about 4.8% of the global PC market last year. That leaves the remaining 94% or so of PCs running Windows. Smartphone OS figures for Q4 2012 have not been released yet by IDC, but Windows Phone and Windows Mobile market share is typically between 2% to 3%.
Only in the fourth quarter did Microsoft officially enter the tablet market meaningfully with Windows 8 and Surface, and IDC pegs Q4 Surface units at 900,000. In December, IDC estimated that Windows would garner 2.9% of the tablet market in 2012.
When you put all of that together, Microsoft owned about 30.3% of the entire computing device market in 2012. Back in 2009 when the tablet market didn't exist, that figure was 64.2%. That's a remarkable drop in Microsoft's total share of the computing market.
In contrast, while Apple has always been a small player in the PC market, it's been the defining company of the smartphone and tablet markets. While Microsoft was seeing its share of computing decline, Apple's has more than tripled, from 6.1% to 20.7%.
Sources: IDC and Apple.
Tim Cook has long voiced his belief that the tablet market will soon eclipse the PC market as part of the "Post-PC" rhetoric. So far, it's playing out more like Apple envisioned it instead of how Microsoft saw it going.
Add a Comment
The title of the article is deceptive. And yes I have heard it said before that the PC is dead.
But then the author goes on to prove that no the PC isn't actually dead but sales are in decline.
And there are some like me that would never use a smartphone or tablet for anything. No need for the electronic leash.
I don't relish the idea of looking at a screen smaller than the monitor I am using now either. When i play games on my system I appreciate the approx. 24 inch screen on my monitor.
I guess I don't need to be that trendy.
Witness the lineups for the latest product, doesn't matter which one,and you will see groups of people there for no other reason then they have to have the latest status symbol of consumerism. And to one up their friends.
I have a used HP PC and it is an upgrade from the other systems I was using.
Mulakush
PC's have been dominant in the past in both content creation and consumption. The market has diverged recently. Content consumption has far more customers than creation. Since tablets and pocket phone devices cater to the latter market, they will far outnumber the content creation devices by large factors such as 10 to 100. Fortunately for the manufacturers of these devices, these do not require heavy duty computing and can be put together with low performance devices. There is not much incentive for this market to have much more powerful computing. Microsoft will probably remain dominant in content creation market in the corporate world. In the artistic content creation, Apple has been the dominant force. This will ensure that the market for desktop or portable computers or some variants of the same remain useful in the market and will continue to be bought. Far from being dead, PC's will continue to thrive in content creation market.
February 08 2013 at 8:30 PM Report abuse Permalink rate up rate down ReplyIt would have been far better if the title read, "Apple Predicted Market Direction Better than Microsoft Did." The current title is catchy but misleading. "Simple Chart That Proves the PC is Dead," is a non-scientific use of the word "proves." One chart might indicate something, but it proves nothing. That's jumping to conclusions. The essay doesn't deliver on the title either.
"This has been a recurring debate in the tech world for years." For how long can we debate the death of something? For instance, I have a friend who has cancer. It's accurate to say that his health has been declining over the years but it is not accurate to say that he is already dead. Saying that they are already dead would be unnecessaryily discouraging and plain wrong.
'Apple (NASDAQ: AAPL) has proclaimed that we're now entering the "Post-PC" era, but Microsoft (NASDAQ: MSFT) thinks it's more like "PC-Plus."' Alright. This is a good point that shows Apple is moving past personal computers while MS is planning on complementing them. Coolio. That makes sense and might be a good thesis statement for the essay.
"I've misled you a tiny bit; there's (sic) actually more than one chart for us to go through, but don't worry, we'll get to it." The author used the low-ball technique in the title, and has thus done a poor introduction so far. I lack faith in the author's character because of his use of the low-ball. I'm also wary of his logical abilities because of the jumping to conclusions above.
Okay. The chart first chart seems solid. Good. Tablets and mobile phones are increasing in sales while personal computers are declining. The tablets and mobile devices are arguably going to improve and replace PCs. Fair enough. That's reasonable. Good.
Alright. The second chart seems a decent follow-up. Even though it is redundant, it develops the idea the PCs are declining while mobile phones and tablets are ascending. It makes sense that, as PC sales decline while mobile/tablet sales ascend, the PC will have a lower percentage of market share. Good.
Fair enough. Microsoft appears to dominate the PC market, and Apple appears to dominate the mobile/tablet market. Further, since mobile/tablet have a larger market share than do PCs, Apple currently has a larger market share than Microsoft does. Got it. This is logical.
"So far, [the direction of personal computing] is playing out more like Apple envisioned it instead of how Microsoft saw it going." Fair enough. That follows. Apple DOES appear to be doing better than Microsoft is doing, and this is probably, in part, due to their foresight. The conclusion albeit true is a far cry from the promise of both essay's title and its opening paragraphs. The article does not deliver on its promise to prove the death of the PC via one chart.
This is the common fallacy in business circles "if you're not growing, then you're dying". It is wrong.
PCs' growth may be ending, but I don't see PCs going anywhere, and I don't ever see tablets replacing them. Tablets have a hard limit on them: the chips that power them must be power-efficient enough so that they can be made relatively thin and to avoid overheating. Given the same technology, a chip that can draw on more power and that can run hotter will be much more powerful than one that is forced to sip power and to stay cool. Which is why PCs will always remain much more powerful than tablets will ever be.
This power will always be required for media creation and demanding specialized software. Meaning, PCs will stay dominant for work. As to games... games on smartphones/tablets suck. It's not a problem of power, it's a problem of interface. A touchscreen interface is not appropriate for gaming, except for very casual gaming (which is its own niche, granted).
So I don't see PCs going anywhere, but there may be some hybridization trend like the Surface Pro.
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