The Advent of the Post-PC Era: Where Do PCs Go from Here?

6 Dec

When Steve Jobs announced the iPad on January 27, 2010, not all appeared to be aware of the immense impact that the future tech market would be in for. From the initial launch date to the present, Apple’s tablet has not only succeeded in altering consumer habits and expectations, it also revolutionized the entire computing industry, spurring a tablet-release craze while ushering a series of never-before-seen technological breakthroughs. One notable area where the effect seems to be somewhat less positive is the PC industry. Desktops, notebooks, and computer servers are among the PC products whose market performances have been noticeably affected by the iPad’s rising popularity.

The Passing of PC’s Glory Days

The diagram below shows the shipment movements for notebooks before and after the iPad’s release (2010). Whereas the total number of shipped tablets has risen sharply, shipment for notebooks has noticeably decelerated.

Within the past three years or so, numerous PC companies have seen their market status stymied by the tablet devices’ thriving business. One good example of this is Hewlett-Packard, once a dominant player within the industry. At the time when the iPad was just making its way into retail shelves, the California-based company had a stock value of roughly $100 billion USD, nearly four times the amount today. At present, HP’s total stock value is merely at the $25 billion USD mark. The company is only one of many former giants who once thrived during the PC’s glory days but is currently struggling to adjust to the tablet-smartphone dominated era.








The diagram below reveals Acer’s stock price movements. Like HP, the Taiwanese company has struggled throughout the past three years, losing approximately 3/4 of its stock value.








Of course, not all firms have been equally impacted by the iPad’s surging presence. PC makers like Lenovo and Asus, for instance, have found ways to adjust to the market’s new rules and is performing reasonably well within the post-PC era.

Lenovo, in particular, is gaining momentum and has become a market force to be reckoned with. Having grabbed a huge chunk of Acer’s market share, the Chinese company shows respectable performance in the global and domestic realms, and has a major smartphone line that is doing well within the country. Asus, on the other hand, is turning to technological expertise and innovation as a means to remain competitive. In recent years, the company has been praised for the intuitively made “Transformer,” a tablet-laptop hybrid, and Google’s “Nexus 7”tablet, which it helped to build. As both products attained relative successes within the market, the Taiwanese PC maker has been able to thrive and prevent being stuck within the confines of the ailing PC industry.

It’s amazing that it took less than three years for tablets like the iPad to change an industry that had been ruled by PCs for more than 20 years. At this point, what many will no doubt be curious about is the outcome for the PC platform. Will PC products ever be rendered obscure like the Palm device was? What future awaits the once dominant technological platform?

Let us take a look, from different perspectives.

The Global Economic Perspective

Other than tablets, one of the major factors impacting the performance of the PC industry is the unstable global economy. The 2011, 2012 Euro Financial Crisis, the Chinese market’s stagnant growth, and the US’s economic slump are factors contributing to the weakening demand for 3C products. Considering the current situation that the market is in, it is difficult to tell whether the affected sectors will continue to experience difficulties. As such, even if the economy does make a major recovery, buyer momentum within the PC industry—including that for desktops, notebooks, and computer servers—will not necessarily revive immediately.

Some have been hoping that demand from the emerging Chinese market can help to increase buyer momentum for computer products, and as such contribute to the revival of the PCs industry. However, not only is China handling its own economic issues, the country’s climbing smartphone and tablet usage rate will also make it difficult for the PC industry to enjoy the same type of growth that it did before.

Extension of PC Transition Period

As historical patterns show, with the timing of all the Intel processor, chip, and Windows software updates, the average transition period had generally been around three years for notebooks, and four years for desktops. Things changed when the tablet computers arrived on the scene and gave rise to more and more tablet users. With factors such as budgetary concerns and the lack of the need to upgrade to new computers, the notebook and desktop transition periods have been extended to four and five years, respectively.

Taking into account that roughly 70% of consumers buy new PCs out of the desire to replace their old ones, and considering how the transition periods have been extending, estimated PC demand is expected to exhibit a decline of more than 3%.

Windows 8, Intel Platforms Not Performing to Expectations

With regards to the purpose of upgrading computers, priorities have evolved, and now center around: 1. Upgrading overall Internet speed; 2. Purchasing SSDs to increase storage capacity and system response times; and 3. Obtaining huge quantities of large density DRAM as a means to increase system speed and efficiency. Due to the changed priorities, the upgrades to CPU and OS do not seem to carry that big of a weight as compared to the past.

If we were to look at matters from the traditional market perspective, factors like efficient user interface, large program quantity, and cheap hardware are what generally give PCs their competitive edge within the market. With the rise of tablets, along with non-Windows platforms such as Mac OS and Linux, traditional PC success model has been largely impacted and is no longer as viable as before.

Intel and Microsoft, the two notable players in the PC market, are no doubt feeling the pressure as they see their home turf invaded by the tablet device. While the two companies have unquestionably tried adapting by releasing products that appeal new market trends, the performances, sadly, have been lackluster so far.

Intel, on the one hand, initially had high hopes of using slim and light Ultrabooks as a means to retain its customer base and to compete with the Macbook Air and iPad. However, the company neglected to factor in appeal factors such as price and operating system. The ultra-slim notebooks generally cost over $1000 USD, making them tough to market compared to the mainstream, $600 USD ranged Notebooks. Moreover, given that Ultrabooks are still perceived as a part of the “notebook” family, its ability to directly take on tablets is limited. For 2013, the market share for Ultrabooks is expected to only be at around 17%.

For Microsoft, on the other hand, the approach taken was to release an innovative touch interface known as Windows 8. Unbeknownst to the software giant, much of the appeal of Windows products is associated with the consumers’ familiarity with the traditional interface (ie. those associated with Windows 7 or older). Even though Windows8 gives users the option of switching back to the old UI, most people still perceive the platform as an entirely new creation. Making matters arguably less promising is the expensive price tag of many Windows 8 touch-screen notebooks, which acts as a potential deterrent for many would-be consumers.

That the systems used by tablets and smartphones provide their own respective cloud service, in essence, is another possible reason explaining why Microsoft’s platform isn’t gaining too much attention. More and more innovative cloud systems, from the business types to those used for private settings, are being released within the market. The momentum of cloud computing, along with the plethora of such services available, is showing the limitations associated with the type of services that a traditional Windows platform can provide.

If one were to ultimately switch to using the traditional “desktop” mode in their new Windows 8 products, another argument that arises is, what difference does that make with using a Windows 7 product? This puts Microsoft’s new platform in an awkward position, given the effort taken by the company to provide a universal platform that works across PCs, tablets, smartphones, and various entertainment-based systems. There’s no question that Microsoft is no longer the same towering giant that it was before. To tie in with an earlier point, this may, again, have something to do with the weakening PC industry.

As shown by recent market estimates, PC sales have weakened by 21% following the launch of Windows 8.

What Companies Will Stimulate the Next Wave of Change?

The technological world is place filled with dominant tyrants, rising new stars, and has-beens. Who are the has-beens, exactly? Names like DEC, Novell, Palm, Blackberry should immediately come to mind.

In the current wave of technological change, what products will prevail?

From the market perspective, the PC market is of course unlikely to diminish altogether, given that PCs still serve an important purpose in the learning and work environments. However, entering into the post-PC era, the question of what is going to happen to PCs, along with how its industry value will change in the periods to come, is an issue worthy of thinking about.

At present, Lenovo is currently second place in China’s smartphone market (in addition to being on its way to the global top 5), and has the potential to claim the first spot in the overall PC market. The company’s tablet products, on the other hand, are also doing reasonably well in terms of market performance. Should all else go well, there is little question that Lenovo can become one of the leading PC companies in the world.

Asus, on the other hand, has been using tech advancements and good quality products as a means to secure its position within the industry. The company’s notebooks and Transformer tablet, for instance, are currently leading the way in terms of technology and innovation. In the tablet arena, Asus is the only PC manufacturer to make it to the top five in terms of tablet shipments. It will be interesting to see what the future holds for the company.

Companies like Sony and Samsung are also finding ways to create their own path within the Post-PC era, each with various success.

At the moment, Apple has an astounding 50.5% market share of the market. In 2013, though, the Cupertino company’s growth is expected to take a hit due to the rise of the rival Android system.

Samsung has successfully used its advantage as a component maker and its well-received Galaxy smartphone series to survive in the industry. In terms of tablets, on the other hand, it currently holds the second place in the market. The Korean company’s advantage is expected to continue for the next two years or so, making it a major player to keep a lookout for within the industry.

One other notable player worth mentioning is Amazon, which had shown a rather decent performance in 2012. With its roots as an online book retailer, the company uses e-books, various major retail channels, low prices, and cloud computing as a means to pave way for its success. However, the advantage is not likely to persist for too long, given the nature of competition within the areas where Amazon excels.

Every generation will have its trend setters, innovators, and losers. In the 3C market, consumers are likely stick to a product when it’s doing well, but abandon it once something better comes along.

Andrew Grove, the former Intel CEO, once wrote that “only the paranoid survive.”Seeing the aggressive, do-or-die state of today’s market, the paranoia, no doubt, will continue to prevail.

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