Health of Tech: The PC Industry

The PC industry has been shrinking for several years, and while the reasons are clear, many questions remain. Key among them are whether this shrinking is a permanent condition, or whether the PC industry plateaus at a new if lower level.

Generally speaking, I do expect the PC market to continue to contract over the long term, and Microsoft, Intel, and their PC maker partners have all issued guidance to support this opinion. So the question isn't whether it is happening, but rather at what speed it happens.

To help understand the future, it helps to examine the past.

Through 2011, the PC industry saw regular growth, with PC sales jumping from 239.2 million units in CY2006 to a high of 365.5 million units in 2011, at least according to Gartner. In those heady days, many expected the PC industry to hit the 400 million market. Ironically, it experienced its biggest sales bumps in the two years that Apple announced the products that would ultimately trigger the PC's decline: 2007 (iPhone) and 2010 (iPad). In both years, PC sales grew 14 percent when compared to the previous year.

But it's been downhill since 2011. PC sales fell to 351.1 million units in 2012, and just 316.5 million in 2013. By last year, the PC market fell to under 300 million units annually, and today PC sales are where they were about 8 or 9 years ago. That's not healthy by any measure.

A number of factors contributed to this problem.

First and most obviously is the explosive growth of the iPhone and the Android smartphones that followed it: Apple has now sold over 1 billion iPhones, and there are more Android devices in use today than is the case with Windows PCs. This is the primary reason that the PC market will never fully rebound: Many tasks that used to require a PC no longer do.

Then we have Windows 8, which landed with a thud in 2012, exacerbating the problem. (The worst year-over-year loss experienced by the PC industry in the past decade came in the one-year period following the release of Windows 8, when sales fell 10 percent.) Yes, Microsoft should be credited with correctly understanding the impact that mobile devices would have on the PC. But its initial response was hurried, half-baked, and disrespectful of its customer base. As bad in some ways was Microsoft's first foray into PCs with the Surface lineup, a decision that led to all of its PC maker partners adopting Chrome OS as an alternative to Windows.

Not helping matters is that PCs are now far more reliable than they were in the past. When you combine this fact with users' shifting usage patterns---where more and more tasks are completed on mobile devices instead of PCs---you can see the problem: PCs simply last longer and don't need to be replaced as often. This is true for both consumers and for businesses.

So the past trends are obvious enough, but the question remains: Will PC sales level off at some level and then maintain at that level, with short spurts of small growt...

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