October 02, 2013

Is the PC really dead?

By Hisham Isa, Vice President (Marketing)

If you read IDC, Gartner and a variety of mainstream news articles, you might think that PCs have one foot in the grave, thanks to the emergence of smarter phones and tablets.

But to paraphrase Mark Twain, 'reports of my death are greatly exaggerated'.

Yes, PC sales are declining. 

Yes, low-end netbooks are history.

But laptops and desktop computers are here to stay, at least for the foreseeable future.

Here's why . . . 

Facts, Forecasts and Headlines

Let's start with the news coverage . . .
These articles are all based on reports and media releases by Gartner and IDC, which note that
  • PC shipments dropped 10.9% - 11.4% in the second quarter of the year to about 76 million units, as compared with a year earlier. (Gartner)
While the shipping numbers are factual, the two research firms go on to directly link these drops to the introduction and popularity of smartphones and tablets:

  • “We are seeing the PC market reduction directly tied to the shrinking installed base of PCs, as inexpensive tablets displace the low-end machines used primarily for consumption in mature and developed markets. In emerging markets, inexpensive tablets have become the first computing device for many people, who at best are deferring the purchase of a PC." ~ Mikako Kitagawa, principal analyst at Gartner. 
  • PCs are “a less attractive alternative to dedicated tablets and other competitive devices” ~ IDC media release
  • “Although the reduction in shipments was not a surprise, the magnitude of the contraction is both surprising and worrisome. 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." ~ David Daoud, IDC Research Director
Of course, smartphones and tablets – which didn't even exist a few years ago – are increasingly popular. And PC sales are dropping. So, doesn't that mean there's a direct link? What are all these analysts missing?

1. It's not a zero-sum game. Consumers use multiple devices, now more than ever.

No doubt that almost everyone reading this article owns a phone, a computer and possibly a tablet as well. And if you work in an office, your company almost certainly provides you with a desktop or laptop too.

However, what about the average consumer?

BuzzCity regularly conducts surveys of people who have a mobile phone. And this is what they tell us:
  • At least 25% of mobile users also surf with PCs or tablets. And many say that these are their preferred device for surfing the internet.
  • 27% of people surveyed in Q3 2012 said they planned to buy a PC or laptop within the next twelve months, up from 24% when we first asked the question in 2008. 
Most consumers prefer to surf the internet with their phones or tablets, particularly when it comes to social media. But they use PCs for processing photos, reading long emails and creating other content.

2. PCs last longer

Computers have a longer lifespan than they used to. They're also replaced less frequently than phones. 

When bought new, say from Dell, computers tend to come with a three-year guarantee. The standard warranty for a phone is just one year. 

So both devices have built-in clocks for renewal. 

Companies like ours replace PCs when the warranty expires; others are known to replace them in their 5th year.

Phones on the other hand are replaced every 12 – 24 months, with the actual duration often depending on the length of a consumer's contract with his/her telecom company.

3. Businesses still need computers. But they're not replacing them as quickly.

“PCs have become like refrigerators and cars,” writes Gene Marks in Forbes. “Business owners have realised that, with a little IT support and a few hugs, a typical PC can now last 5 – 7 years, even longer. PCs for business use don't have to be sexy. They just need to run the business applications necessary.”

And thanks to the 'cloud', PCs don't need a lot of processing power to run programmes. The hard number crunching is now being done by a server half way across the globe. Cloud computing also means fewer compatibility issues. Remember when upgrading your software meant that you also needed the latest Windows operating system (which in turn demanded new hardware)?

Even older PCs are good for email and basic surfing. Just go to your nearest internet cafe and you'll find lots of 'middle-age' PCs at the service of backpackers, freelancers and migrant workers.

The bottom line

The PC is not dead. It's not even dying. We still use them, we're just not buying them as often. This might not make for sexy headlines, but it's the reality. In fact, consumers increasingly consume content across multiple devices, which has implications for advertisers. More about this, though, in another post.