Every quarter tech watchers and Wall Street traders pour over the latest shipment figures from the big technology analysis firms looking for signs of renewal in the moribund PC business. The latest numbers for Q4 2o14 show an industry coming off the ‘sugar high’ induced by upgrades from Windows XP refugees needing hardware capable of running a modern OS, with shipments about the same as in 2013. IDC estimated that worldwide, PC shipments fell 2.4% from the prior year’s quarter while Gartner figures show a 1.0% increase. As I write in this column, the difference is almost surely due to the way each defines the term ‘PC’. Gartner includes Windows-based tablets — which could be anything from the $110, 7-inch Toshiba Encore Mini to the $1200+Lenovo Yoga 3 Pro — but IDC does not. The firms also differ in their treatment of Chromebooks, which typically borrow the physical design and innards of a low-end notebook but run Google’s lean Chrome OS which uses browser-based cloud applications, not locally executed code and storage. In this case, IDC includes Chromebooks while Gartner doesn’t. Neither counts any device running iOS or Android, even something like the HP Slatebook, a 14-inch Android notebook that’s actually more expensive than many entry-level Windows products.
The numbers reflect people’s post-PC work and life styles in which more and more of one’s routine communication, information and productivity needs can be handled by something other than a Windows-based laptop. As I wrote last year, more people are working mobile, making a smartphone and tablet the centerpiece of at least their out-of-office work lives. Indeed, the analyst firms’ PC definitions erroneously draw bright lines between device types where the reality is many shades of grey given that a well designed Bluetooth keyboard case turns an iPad or Android tablet into all the ‘PC’ some people need and a viable notebook replacement for many scenarios.
As the column illustrates, PCs are but one end of the personal device spectrum in which buyers trade off several factors based on usage scenario, application requirements and personal preference. These include:
- device and screen size
- OS and UI
- local, remote or hybrid data storage and app execution
- touch screen or keyboard
Further eroding PC hegemony is the fact that choice of device is decreasingly a function of application exclusivity now that more titles and product categories are available as mobile apps and SaaS using cloud backends and storage to maintain application state, personal profiles and user data across devices. Thus, it’s trivial for users to start a task on one platform and finish it on another.
The column details the many factors behind the persistently lackluster PC business, notably the popularity of two device categories, tablets and Chromebooks, that are displacing PCs in many work and education scenarios. Although Chromebook sales are still but a tiny fraction of the PC total, they are growing at a 40% CAGR and are almost entirely displacing sales of new PCs. Although long derided as little more than a browser on steroids by the techno-elite, now that more people actually have experience using Chrome OS they understand what I wrote almost two years ago:
The real beauty of Chrome isn’t so much the UI (while lacking the polish of OS X or the novel look of Windows 8 or Ubuntu Unity, it is certainly not ugly), but its speed, stability and simplicity. The thing just works — fast and without software maintenance. Chrome OS updates download and install automatically, and the cloud-based apps are inherently auto-updating. There’s also no data maintenance, since, unless you make a conscious effort to store something locally, it’s all online, meaning there’s no need to worry about making copies of email attachments or to save documents you’re working on — Google Apps literally don’t have “save” functions. Chrome devices are also inherently self-replicating: your environment, settings, profile, apps, bookmarks and data are automatically synchronized to the cloud and show up on any Chrome device you happen to be using.
A New Client Device Lexicon
Instead of using tired, antiquated metaphors to phones and typewriters, I prefer to think of devices in terms of form factor and UI. In this light, today’s device landscape can be divided as follows:
- one-handed, keyboard: feature phones
- one-handed, touchscreen: smartphones
- two-handed, touchscreen primary, keyboard secondary: tablets
- two-handed, keyboard primary, touchscreen secondary: hybrids (e.g. Surface Pro)
- laptop, keyboard primary: traditional Windows, Mac notebooks, Chromebooks
In this mobile, cloud era, choice of application is dictated by user, not device requirements. Using a variety cloud backend services and APIs, what IDC has coined 3rd platform apps can seamlessly, transparently maintain data, state and configuration consistency across application instances, whether using a mobile app, thick desktop application or browser-based SaaS.
The term ‘PC’ has now outlived its usefulness. When analysts of Intel’s earnings continue to fixate on PC sales, highlighting single-digit growth, they lose sight of the firm’s dramatic growth in data center infrastructure where sales increased 25% on a year-on-year basis with platform volumes up 15% and platform average selling prices up 10% over last year’s figures. As company execs like to remind skeptical analysts, every 600 new smartphones translates to demand for one new server. If smartphones are the new client, cloud services are the new server, so Intel’s sales increasingly shift from the front end to back, even as it builds the technological foundation for a new era of wearables, industrial sensors and smart devices.
The market for end-user computing and communication devices has never been more vibrant. Hoping to characterize the state of tech industry health using a single, restrictive metric was always unwise, but it’s now impossible.