Better connectivity undermines PC sales

by Steve Blum • , , ,

Tablet sales will soar past stagnating personal computer results, according to forecasts released today by International Data Corporation. With mobile networks powering handheld productivity and growing commercial and industrial grade fiber networks enabling more and more work to be shifted onto servers, PCs are caught in a squeeze.

IDC expects 59% growth in tablet sales in 2013, reaching 229 million units, up from 145 million in 2012. That means more tablets will be sold this year than laptops (including netbooks, ultrabooks and the like). By 2015, more tablets will be sold than desktop and laptop PCs combined.

Mostly, that’s because tablets are increasingly popular, with demand growing at rates consistent with other mobile products and services. But it’s also because PC sales are expected to sag. IDC predicts an 8% drop in PC sales in 2013 and a further 1% decline in 2014. That means 322 million PCs will be sold this year, versus the peak of 363 million reached in 2011.

If anything, IDC’s figures are overly optimistic. They expect PC sales growth to turn positive in 2015 and creep back up to 333 million by 2017. But three months ago, they were only expecting a 1% decline this year. PC market weakness is growing, and I don’t think IDC has figured out how to factor it into their modeling.

They assume that the discontinuation of support for Windows XP and generally aging desktop computers will drive enterprise sales. The problem with that assumption is that as processing and storage on servers – in the cloud – grows, the need for personal horsepower decreases. With broadband network capacity and traffic growing, the demand for PCs will continue to decline.