- The Washington Times - Sunday, June 12, 2011

Personal computers may soon be going the way of landline phones and black-and-white televisions. New market figures suggest consumers are losing interest in traditional PCs, as flashy smartphones and tablets attract the buzz and the sales in a crowded marketplace dominated by the latest technology.

Three forecasts from prominent research firms delivered a big blow to the PC industry last week, warning sales will be lower than expected in 2011. In the first quarter, worldwide PC shipments were down 1.1 percent overall and 4.4 percent among consumers, prompting the International Data Corp. to cut its expected growth rate in computer sales for the year to 4.2 percent, down from its previous prediction of 7.1 percent.

“The PC market has definitely hit a slow patch,” said Loren Loverde, IDC’s vice president for worldwide consumer device trackers.

J.P. Morgan also cut its estimate by about 15 million units to 360.75 million computers sold this year. That’s a growth rate of only 2.8 percent, down from its 7 percent prediction earlier in the year.

Gartner, a technology research company, separately dropped its estimate to 385 million units, a 9.3 percent growth rate, down from its previous 10.5 percent prediction.

“Weak demand for consumer PCs was the biggest inhibitor of growth,” Mikako Kitagawa, principal analyst at Gartner, said in a statement. “Low prices for consumer PCs, which had long stimulated growth, no longer attracted buyers. Instead, consumers turned their attention to media tablets and other consumer electronics.”

Back in December, Goldman Sachs issued a similar warning, predicting tablet sales would cut into PC sales at of rate of 33 percent to 35 percent. “The fast rise in tablets could have significant implications across the technology industry as a whole,” Goldman Sachs analyst Bill Shope told the media.

These numbers are much lower than the nearly 20 percent growth rates the industry was noticing just a few years ago. But those days are long gone.

Apple Inc. has floated the term “post-PC world.” Scott Forstall, senior vice president of iPhone Software, has said, “We have a lot of customers coming to us and saying, ‘I want to buy an iPad as my only device.’ … So, now, if you want to cut the cord, you can.”

Mr. Forstall’s boss, Apple CEO Steve Jobs, caused a stir last week while touting the company’s latest software and services, and especially its reliance on “the cloud” — the cluster of industrial-scale data centers that are taking over the job of data storage and processing out of the hands of the humble personal computer.

“We are going to demote the PC to just a device,” Mr. Jobs told analysts and Apple enthusiasts last week. “We are going to move the digital hub, the center of your digital life, into the cloud.”

The idea has caught on with many tech blogs, including Engadget and ZDNet, which writes: “The post-PC era is real.”

But Apple hasn’t sold everyone on the idea. The so-called “death of the PC” has been repeatedly predicted by experts in the past, while the growth numbers stubbornly refused to back them up.

“I think they’ve been dazzled by other devices,” said George Shiffler, research director at Gartner. “Are we in a post-PC era? I’d say, ‘no.’ None of these devices will dominate the PC.”

CNET’s Stephen Shankland wrote, “I’ve been hearing ‘post-PC era’ so much now that I wince when I hear the term … . There is no post-PC era.”

Others who shy away from the term say it makes sense that Apple would tout a market it dominates.

“Of course, Apple would see it that way,” writes PCWorld’s Jason Cross. “Though sales of Macs continue to increase, they’re a long way from making a dent in the global market share of computers. IPhones, iPod Touches and iPads, on the other hand, enjoy a fantastic market share. They’re responsible for most of Apple’s revenue.”

For decades, PCs have served as a one-size-fits-all solution for consumers. But that is changing. Now, consumers want devices that specialize in different areas, whether it is music, communication or portability. The PC, critics say, is specifically designed not to specialize in any one thing.

“The PC isn’t going to be replaced by anything,” Time magazine wrote. “Instead, it’s being replaced by … everything.”

If the industry is to survive, analysts say, it will have to reshape itself as the “hub” for new devices like smartphones, tablets and smart TVs that specialize in certain areas of technology.

“No single device wins,” Intel CEO Paul Otellini told CNET. “We don’t see an environment where one machine satisfies all needs. At least for the next four to five years, we’re likely to see multiple devices and multiple form factors simply because people want to do multiple things.”

“What we see people doing is, going forward, they will hold a portfolio of devices,” Mr. Shiffler added. “I think the PC will be the anchor of that portfolio.”

But he acknowledged there will be “pressure on the PC to evolve if it’s going to remain part of that.”

While some think tablets will ultimately replace PCs, others say there are subtle differences that make them complementary and not substitutes. Tablets are more portable than PCs. They employ a touchscreen, instead of a traditional keyboard and mouse. They also have longer battery life and have an instant-on feature that is faster than waiting for a PC to boot up.

“In the end, there’s going to be a need for both devices,” Mr. Shiffler explained. “I can’t imagine that the PC is going to go away and sulk in a corner. There’s just too much invested in it.”

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