SourceCode: Why is the PC market is slowing down so drastically?

By Gadjo Cardenas Sevilla

You can blame it on the red-hot popularity of smartphones and tablets, changing consumer behavior, or the failure of Windows 8 to take off as expected, but the PC market is facing its steepest decline ever. 

A recent report from the International Data Corporation (IDC) spelled out what many have already known for some time. The PC market is undergoing an unprecedented free-fall.

Worldwide PC shipments totaled 76.3 million units in the first quarter of 2013, down -14% compared to the same quarter in 2012 and worse than the forecast decline of -7.7%. The first quarter of the year has traditionally been a seasonal downturn for PC sales, but never like this.

This is the fourth quarterly decline in a row now for the PC market and the worst since IDC started tracking the data in 1994.

This is despite an increase in available designs and form factors for PCs. Aside from traditional desktops, all-in-ones and various sizes of notebooks, we’re seeing a wide variety of tablets and convertible devices that flow between tablet and notebook permutations.

The IDC report states, “PC shipments were down significantly across all regions compared to a year ago. Fading Mini Notebook shipments have taken a big chunk out of the low-end market while tablets and smartphones continue to divert consumer spending.”

Many hoped that the availability of Microsoft’s Windows 8 operating system would lead to increased sales as manufacturers like Lenovo, HP, ASUS, Acer, Toshiba and others released a bevy of new products and expanded categories to include multi-touch devices optimized to run Windows 8.

Windows 8 was released in October 2012 with a new multi-touch tile-based interface. While Microsoft has claimed to have sold 100 million licenses, IDC believes that the new OS has actually been a factor in the slowing of the market. 

"At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," said Bob O'Donnell, IDC Program Vice President, Clients and Displays 

"While some consumers appreciate the new form factors and touch capabilities of Windows 8,” O’Donnell explains, “the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices."

Tami Reller, Microsoft’s Chief Marketing Officer and Chief Financial Officer said in a Windows blog post, that the PC market is expected to pick up. “Windows 8 is a big, ambitious change. While we realize that change takes time, we feel good about the progress since launch.” 

“The PC is very much alive and increasingly mobile. The PC is also part of a much broader device market of tablets and PCs. Windows 8 was built to fully participate in this broader and increasingly mobile device market,” Reller explained.

Innovation in the mobile space, on the other hand, is at an all time high. Consumers now have a wide selection of truly compelling handsets and tablets. Smartphones are experiencing a peak in terms of power, design and functionality. This is resulting in unprecedented competition and consumer choice.

Being more personal devices, smartphones and tablets are more portable and more connected than PCs especially with the availability of 4G and LTE data plans.

"The industry is going through a critical crossroads, and strategic choices will have to be made as to how to compete with the proliferation of alternative devices and remain relevant to the consumer,” says David Daoud, IDC’s Research Director for Personal Computing.