Bloomberg News

Electronics Industry Upheaval Accelerates as PC Sales to Drop

April 04, 2013

Consumer-electronic shoppers are increasingly favoring tablets and smartphones at the expense of personal-computer sales, according to a report from research firm Gartner Inc.

Shipments of tablets are estimated to jump 70 percent in 2013 as more lower-priced models are released, while smartphones such as Apple Inc. (AAPL:US)’s iPhone and Samsung Electronic Co.’s Galaxy S4 will advance 48 percent, according to Gartner.

By contrast, desktops, full-size laptops, lightweight notebooks and computers that are convertible into tablets will fall 3.5 percent, Gartner said. Excluding the newer slimmer models, shipments of traditional PCs will drop 7.6 percent.

Customers are using mobile devices for a broader array of computing needs. The shift has benefited Apple and Samsung, whose sales and profits have grown, while revenue at companies dependent on personal computers such as Hewlett-Packard Co. (HPQ:US), Dell Inc. (DELL:US) and Microsoft Corp. have slumped.

“For PC vendors, this is bad news,” Carolina Milanesi, research vice president at Gartner, said in an interview. “The decline is happening in a much sharper way than what we initially anticipated.”

The drop in traditional computer shipments indicates that Microsoft’s redesign of the Windows operating system hasn’t created the kind of demand computer and chipmakers like Hewlett- Packard and Intel Corp. (INTC:US) had hoped for, Milanesi said. PC sales fell 3.5 percent last year, according to Gartner.

“The hope was that everybody was going to get excited about Windows 8 and upgrade their devices, but they are struggling,” Milanesi said.

Microsoft, Apple

Further challenging Microsoft is that as consumers spend more time on smartphones and tablets, the ecosystem around those devices, such as Apple’s App Store and Google’s Play, becomes more important, Milanesi said. The sale of software applications through those digital storefronts threatens Microsoft’s Office software business, she said.

“If you’re doing your tax returns you don’t need to have an Excel spreadsheet,” she said.

Dell, once the top seller of personal computers, is another victim of the switch. Founder Michael Dell is attempting to take the company private as part of an effort to adjust to the changing dynamics away from the scrutiny of the public stock market.

While the PC business is struggling, the overall consumer- electronics industry is growing. When combining shipments of phones, tablets and personal computers, device shipments will increase 9 percent in 2013 to 2.41 billion, up 9 percent from last year, Gartner said.

Google’s Android operating system will account for 36 percent of those devices, Microsoft’s Windows software 14 percent, and Apple’s iOS and Mac software 12 percent, Gartner said.

Total device shipments are projected to hit 2.96 billion by 2017, Gartner said.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story:


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