The PC: Back from the dead, again (ZDNet)

Summary: After years of PC shipments declining, Gartner reports the market is picking up in the US and Europe.

By Nick Heath | October 8, 2014 

The marked decline in PC sales in recent years has prompted many commentators to pronounce the PC as dead.

But those rumours may have been greatly exaggerated, if the latest figures from analyst house Gartner are to be believed.

While worldwide PC shipments declined by almost 10 percent in 2013, there was only a 0.5 percent decrease in shipments year-on-year during the most recent quarter of 2014. In the US and Europe the number of PCs shipped during the quarter actually increased over the year before, up 4.2 percent in the US and 9.1 percent in Europe, Middle East and Africa.

Lead analyst at Gartner Ranjit Atwal attributed the rise to a number of factors, but principally businesses refreshing their PCs running Windows XP, which stopped being publicly supported by Microsoft in April this year.

Lenovo was again the worldwide leader in PC shipments, accounting for 19.8 percent of the market in the third quarter of 2014. While HP's overall growth rate slightly declined in PC shipments, it was able to post single-digit growth to maintain the No. 2 position worldwide. Dell had another strong quarter, indicating its investment in the PC market has remained consistent since it went private. Image: Gartner

"On the professional side we see growth from continued Windows XP migration. That's really driving growth in the desktop to notebook professional market. Especially in North America and Western Europe. They're migrating from XP to newer operating systems, generally Windows 7 and in some cases Windows 8," he said.

Atwal expects migrations away from XP by smaller firms will continue to buoy up PC sales.

"There's still a larger small and medium business segment out there that will keep this going for probably a couple of quarters," he said.

"We’ve gone from a minus 10 percent [shipments] last year to minus 1 percent this year to maybe slightly positive growth next year. What I don't expect is that we'll go back to minus 10 percent again next year."

However, once businesses have replaced machines running XP that doesn't mean PC sales will be back in freefall, Atwal said, as consumer demand for the latest crop of lighter, thinner PCs with better battery life – the likes of ultrabooks, 2-in-1s and tablet convertibles – grows.

"What we've seen in the last quarter, and will probably see in this quarter as well, is more life in the consumer side.

"We've been through that trough of change and those who have PCs now will come back into the market and look to replace them. But there’s also a portfolio of PC products out there – 2-in-1s, tablets hybrids, convertibles that have the battery life and are thinner and lighter, so will tick a lot of the boxes that users are looking for."

While shipments of PCs are showing signs of recovery, demand for tablets is slowing, with Atwal describing the shifting fortunes as a rebalancing of the market for computing devices.

”The install base of PCs grew really, really quickly because between 2008 and 2010 there weren’t any alternatives, so anybody that needed access to the internet purchased a PC. What we’ve seen over the past few years is a filtering out of that install base. Those who found better alternatives have moved. The install base is smaller and instead of getting annual volumes of 400 million we’re more towards the 300 million kind of level," he said, indicating that user base may now stabilise.

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Some who bought tablets are now choosing to replace them with PCs or deciding they also need a PC, according to Atwal.

"We're seeing overall tablet volume slow down. Especially in the US where there’s been a lot of penetration of tablets over the last few years, especially with iPads.

"There’s a little bit of a trend back towards PCs, with a realisation by users that a tablet might not do everything they want it to."

PC shipments have grown in what Gartner terms "mature markets" for computing devices, with the analyst house expecting similar patterns of adoption in the emerging markets "some time later in 2015".

Atwal expects to see businesses and consumers will settle on a mix of computing devices – spanning phones, tablets and PCs.

"It's a combination of tablets and PCs and even phones as well, as they get larger screen sizes. So really the next move is into those combinational devices. It's about what sort of screen real estate or what sort of weight you need for the kind of work you do."

Ultimately, in spite of the uncertainty over prospects for the PC market, the PC was never really dead, he added.

"It was never the case that PC was ever going to disappear. It was always a period of readjustment."