Can AI Save the PC Industry? (Premium)

Microsoft and its chipset and PC maker partners offer bullish predictions about a future in which AI innovations drive a new wave of PC upgrades. But the PC market is in freefall right now, and it's only getting worse. Can AI save the PC industry? Or is it already too late?

It's not looking good right now: The PC industry has now suffered 8 consecutive quarters---two full years---of year-over-year sales declines, during a pandemic-era boomtime into a digital Great Depression. And there's precious little in the way of a silver lining here, despite the cautious predictions of future stabilization growth from analysts at Gartner and IDC and elsewhere in recent quarters.

And that makes this past quarter's news so much more horrible: Hardware makers sold 66.25 million PCs in the third calendar quarter of 2023, a decline of 7.4 percent when compared to the 71.15 million units sold in the same quarter one year ago. (As always, these numbers are averages of those provided by each firm.)

Now, the glass-half-full crowd will point out, correctly, that PC sales had fallen an even higher 17.25 percent in that year-ago quarter. And fair enough, but the general trend here is that the expected market stabilization keeps getting pushed back: We were told that the sales shortfalls end by this point in time and then perhaps to expect some modest growth in the years ahead as corporate upgrade cycles kicked in again.

The post-pandemic boomerang effect was bad enough---it's still ongoing, after all---but the promise of a white knight riding to save the industry in the form of AI makes today's dull reality even harder to swallow. The dream is compelling: Thanks to a coming wave of AI innovations, PCs will suddenly become even more important, and consumers and businesses alike will upgrade en masse in ways they have not done since the rise of the Internet and the release of Windows 95 in the mid-1990s.

I like this dream. It's nostalgic and overtly positive, and it harkens to a bygone again in which Microsoft reigned supreme. But I also realize, pragmatically, that those days are over. And even Apple, the darling of the consumer world, no longer sees lines of customers snaking around the corner from its retail store on product launch days. In the modern era, we all buy more products than ever, but we do so behind closed doors and those products are shipped to us, at home. Oh, there are still lines. They're just lines of trucks on the highways.

And maybe more to the point, AI as a technology will lift all boats and there is no reason to think that its impact will incommensurately impact the PC industry. Back in March, I noted in When Everything is AI, Nothing is AI (Premium), that when AI becomes table stakes, as is happening, the playing field remains unchanged. Back then, I was concerned about Bing's position in the market vis-à-vis Google Search, and it's fair to say that my argument was sound, since Bing's usage share hasn't moved an iota sin...