iPAD, other touch screen tablets to lose market appeal?
Amid the growing popularity of the iPad and other touch-screen tablets, research firm International Data Corporation said Monday that worldwide shipments are now expected to grow by just 4.2 percent in 2011, down from its February forecast of 7.1 percent.
IDC said that a combination of declining first quarter shipments, an increasingly conservative economic outlook, relative saturation among developed market consumers, and competing products will lead to slow growth in PC sales (desktops and laptops) in 2011 before a rebound in 2012. For 2012 through 2015, growth is still expected to fall in the 10 percent to 11 percent range.
Netbooks Out
IDC notes that consumer PC purchases have been a cornerstone of PC growth over the past five years. During this time, a transition to low-cost portables helped drive purchases by new users in emerging markets as well as replacement and secondary systems in more mature markets. The growth in 2009 was largely fueled by the mini notebook (also known as netbook) boom. Consumers in mature regions snapped up over 19 million mini notebooks in 2009 vs. just 6.6 million the prior year, and the jump accounted for over 80 percent of volume growth in the segment.
However, according to IDC, the appeal of low prices for mini notebooks has given way to a number of factors, including relative saturation following this boom cycle, recognition of their limitations, and better competition from both mainstream notebooks and media tablets, which increased 31 million and 17.9 million units in 2010 respectively vs. just 1.3 million for mini notebooks.
"Consumers are recognizing the value of owning and using multiple intelligent devices and because they already own PCs, they're now adding smart phones, media tablets, and eReaders to their device collections," said Bob O'Donnell, vice president, Clients and Displays. "And this has shifted the technology share of wallet onto other connected devices."
According to IDC, consumers are also increasingly affected by the prolonged recession -- affecting not just housing, employment, equity markets, and GDP, but also rising energy and food prices, relatively high debt, and tight credit -- much of which hits directly at consumer discretionary spending.
Ultrabook and Chromebook
Intel Corp. (INTC) is promoting a new type of thinner and lighter mobile computer called an ultrabook in a bid to challenge the growing dominance of Apple Inc. (AAPL)'s iPad. Intel said the ultrabook will marry the performance and capabilities of today's laptops with tablet-like features and deliver a highly responsive and secure experience, in a thin, light and elegant design. Intel said that the ultrabooks, which will be less than 0.8 inches thick and will cost under US$1,000 per unit, will be available during the 2011 winter holiday shopping season.
Google Inc. (GOOG) announced last month that laptop computers running on search giant's Chrome operating-system software will go on sale in June, marking a significant step in its effort to compete with Microsoft Corp. Google said booting the Chromebook and opening the browser (solely Google's Chrome) to take only "seconds" and the the laptop lasts a day of use on a single charge. Samsung and Acer are releasing the initial batch of Chromebooks starting June 15 in the United States. The Acer 11.6-inch Chromebook will go on sale for $349.
However, according to IDC, the potential boost to the PC market from thinner designs, longer battery life, instant on, touch, and other improvements will likely not be widely available until 2012, and will have to address price-sensitive buyers in order to drive higher levels of growth. "In fact, the appeal of these future enhancements could be seen as another motive for consumers to delay the purchase of a new PC until they are available and to focus on other products in the meantime.
PCs vs. Tablets
Desktop computers and laptops continue to outsell tablets. Last year, nearly 18 million tablets were shipped, with Apple's iPad cornering nearly 83 percent of the market. More than 346 million personal computers were shipped in 2010, with Hewlett Packard grabbing 18.5 percent of the market, and Dell, Inc. having 12.3 percent.
However, while PC sales have slowed down in the past two years, iPad sales have skyrocketed. IDC said last month it expects that there will be 50 million tablet shipments in 2011, with Apple maintaining 70 percent to 80 percent of the tablet market. Jefferies & Co. projects that 70 million tablets will be sold this year, with the total expected to increase to 246 million in three years.
Apple sold 4.69 million iPads in the first quarter of 2011, for a total of about 20 million since the April 2010 debut, and outselling all the other tablets combined. Apple is expected to face more competition this year from Research in Motion's PlayBook, Samsung Electronics Inc.'s Galaxy Tab and Motorola Mobility Holdings Inc.'s Xoom, though these devices still have to gain traction
PC Market hits a low
The world's top PC seller Hewlett-Packard said its PC sales decreased 23 percent last quarter due to a "continued softness in consumer PCs across all geographies." Dell Inc., HP's main rival, saw sales to consumers slump 7.5 percent, acknowledging that sales fell partly due to competition with the iPad and other tablets.
According to IDC, first quarter 2011 PC shipments were down 1.1 percent from the prior year. IDC expects that the relatively strong growth in the second quarter of 2010 is likely to keep second quarter 2011 growth low. "This trend in consumer growth, along with only modest growth in the commercial sector, a cautious outlook from PC makers, disruptions including the Japan earthquake and nuclear disaster, the Arab Spring, and reduced economic projections (including government stimulus) will keep overall growth in single digits the rest of 2011," IDC said.
Nevertheless, IDC expects significant growth in both consumer and commercial markets to continue beyond 2011. New designs, chips, operating systems, features, and services, along with falling prices will continue to make PCs more powerful, affordable, and functional than ever before. Despite incursions by smartphones and media tablets, PCs have a large user base and ecosystem, and continue to represent the most comprehensive and affordable computing platform. Adoption by new users in emerging regions as well as replacements in more mature markets will continue to drive double-digit growth through the end of the forecast.
"The PC market has definitely hit a slow patch," said Loren Loverde, vice president, Worldwide Consumer Device Trackers of IDC "Nevertheless, the long-term growth drivers -- first among which are growth in emerging markets, declining prices, and growing functionality -- remain intact, and the product and design innovations underway will keep PC growth healthy in the long term."