Thinking About the PC Market (Premium)

Yes, the PC market grew---if barely---in the most recent quarter. But what about calendar year 2018 and beyond? What are the broader trends?

As you may recall, we marked a dubious milestone in January 2018 when it was found that the PC market had just suffered through its sixth straight year of falling sales: PC sales in 2017 were down 1.5 percent overall from the year before. And with 261 million units sold, it was the worst year for PC sales since 2006.

Looking at the unit sales data from a long-term perspective, we see two trends. PC sales have consistently fallen, year-over-year from their peak in 2011, with 365 million unit sold. And, conversely, the sales shortfall seems to be plateauing a bit in recent years, giving onlookers hope that we might arrive at a more stable, if smaller, PC market.

Between that 2011 peak and last year, the PC market has fallen in size by over 100 million units per year. Today's PC market is just two-thirds the size it was at the time of its peak.

The culprit, of course, is the worldwide embrace of mobile devices, especially smartphones. And while the smartphone market is likewise maturing, with sales actually falling year-over-year for the first time in 2017, this market is dramatically bigger than that for PCs. Hardware makers sold over 1.5 billion smartphones in 2017. That's almost six times as many smartphones sold for each PC sold in the same time frame.

Factor in tablets and the gap gets even bigger: Hardware makers sold about 163 million units in 2017. So it's fair to say that the global market for portable computing devices overall is over 6 times the size of the PC market.

But that's where things stand today. Each of the major platform makers in these markets is also improving its products to be more competitive. And the overreaching goal, from what I can see, is to slowly eliminate the traditional PC market and replace it with hybrid devices that can do it all.

Consider how each of these platform makers is pushing towards this future.

Apple has, of course, made major strides with iOS and the iPad Pro, and it is now bringing iPad apps to the Mac.

Google has brought Android app compatibility to Chrome OS and has expanded Chromebooks to include new form factors like tablets and 2-in-1s.

And Microsoft has a long-term vision to minimize and then eliminate the legacy desktop interface from Windows and transition into a more modern computing infrastructure I'll call S mode for simplicity's sake.

These changes will not happen overnight. And there are questions about how the addition of mobile app support to desktop platforms will impact those platforms. My take on this is that the net effect will be beneficial to users. But it will also help cement the notion that PCs (and Macs) play an ancillary role, and this will ultimately undermine them further. Increasingly, users are turning to PCs only when they have to, and not regularly.

There are exceptions, of course: One of...

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