Last year was rough for PCs. There’s no getting around that. But it wasn’t bad enough to merit the doom and gloom that has accompanied two reports detailing their continued decline in popularity. The PC situation is much better than the pundits would have you believe.
The reports, from industry-tracking stalwarts Gartner and IDC, show an overall drop in the global PC market of 8 and 10.4 percent, respectively. That sounds bad. And to be fair, it’s not actively good. Take a closer look at what the numbers actually say, though, and the context in which they say it, and you have a picture of an industry whose death has been greatly exaggerated.
Unsurprisingly, the “global PC market” comprises a lot of moving parts. A single number, however dramatic it appears, belies a range of strengths and weaknesses. Especially when that number, in one instance, doesn’t include a substantial chunk of what reasonably could be considered a PC.
Let’s look at just what we're counting here. Gartner lumps in detachable devices like Microsoft’s Surface in with traditional PCs, while IDC explicitly does not. That somewhat explains the gap between the two, but IDC concedes that including those increasingly popular hybrid devices would have resulted in an overall decline of 7.5 percent for the year---in line with Gartner's figure---and 5 percent for the last quarter.
More importantly, IDC sees what it calls detachable tablets “growing quickly, but from a small base.” That’s especially impressive given that the most visible of them, Microsoft’s Surface Pro, didn’t receive an update until deep into October. That's encouraging, if that really is where the industry is moving. But even if it isn't, and traditional PCs turn out to be what we wanted all along, the picture’s still not nearly so dire as it seems, particularly in the US. Stateside, IDC says PC shipments fell just 2.6 percent in 2015 compared to 2014. Gartner pegs it at 2.7 percent. In either case, nothing close to a freefall.
The pockets of strength aren’t just geographic. Apple managed to increase worldwide shipments by 5.8 percent (Gartner) or 6.2 percent (IDC) last year. Lenovo saw a monster year in the US, increasing shipments by 14.5 percent.
“Especially for Lenovo, they’re doing very well in the 2-in-1 segment,” says Gartner analyst Mikako Kitagawa. “They’ve made them affordable; you can buy a nice 2-in-1 for around $600. I think that’s a really good market.”
As for Apple, well, it’s pretty much what you’d expect. “Apple’s emergence as a top five global PC vendor in 2015 shows that there can be strong demand for innovative, even premium-priced systems that put user experience first,” says IDC research manager Jay Chou. The charitable takeaway would be that PC makers already have innovative products (the Dell XPS 13 is, after all, a great device). They just need the marketing to match.
Even if you take a less optimistic view, though, there’s still plenty of reason not to write off PCs just yet, especially when you dig into the reasons behind the numbers. “There are a lot of moving parts that are going on,” says Patrick Moorhead, founder of tech analysis and advisory firm Moor Insights & Strategy. “I am not convinced at all that we are entering some sort of maturity or decline phase in PCs. Just look around. What are people using in the workplace? What are they using in their homes when they need to get stuff done?”
The answer, by and large, is a PC. And the reasons they're not selling have less to do with abandonment than circumstance.
A confluence of factors that worked against PCs last year show up in the sales numbers. The first, and perhaps most important, is directly reflected in the wide performance disparity between the US (not so bad!) and the rest of the world (pretty terrible!).
“The euro has been pretty weak against the US dollar,” says Kitagawa, “which means that those customers have a price increase. That can really shape the market. You can see that in Europe, and in Japan and Latin America, especially Brazil, where PCs were hit by a really high price point because of the devaluation of the local currency against the dollar.”
China, too, has been hit by decline in consumer confidence. It’s not surprising, then, that those regions saw a double-digit decline in shipments. The products suddenly cost more, even as consumers have less purchasing power. It’s a combination that makes putting off upgrading a PC an easy choice.
This was an easy choice for many US customers as well, thanks to the introduction of Windows 10 last summer. Windows 10 was free to most existing Windows users, helping people wring a little more life out of a flagging laptop rather junk it and upgrade. “It removes some of the Windows 7 issues that you may have been contemplating getting a new PC for,” says Moorhead.
That delayed replacement is nothing compared to the enterprise market, still a PC bastion, which typically takes 12-18 months to evaluate a new operating system before investing in new hardware for employees. For those watching the calendar, that means we should see a significant uptick in commercial sales at the back half of this year.
“PC replacements should pick up again in 2016, particularly later in the year,” says IDC executive VP Loren Loverde. “Commercial adoption of Windows 10 is expected to accelerate … Most PC users have delayed an upgrade, but can only maintain this for so long before facing security and performance issues.” Moorhead and Kitagawa expressed similar sentiments.
There are other positive notes ahead. The long-delayed release of Oculus Rift may not drive appreciable sales, but it’s at the very least a reminder that PCs can be aspirational products. Large phones continue to rise, but have so far impacted tablet sales (themselves down, Moorhead notes, over 12 percent in the third quarter of last year) far more than PCs. And new, premium form factors like the Surface Book have given the market some much-needed shine.
It’s obviously not all clear skies and rose petals for the PC industry. The global economy is off to a rough start this year, and truly mobile devices will continue to improve at tasks that were once strictly PC provenance. Analysts expect the next two years to be either slightly down or slightly up, but certainly not a boom time.
A little perspective is important, though. It’s nowhere nearly as bad as it looks. Or at least, nowhere nearly as bad as you’ve been told.
