Looking at the Computing Market with a New Set of Eyes
Stephen Baker, Vice President, Industry Advisor ;
The news today is full of doom and gloom about the future of the PC. Undoubtedly, there are plenty of challenges ahead for the category, but there is also plenty of room for optimism. While we celebrate so many things in tech that have been reimagined or disrupted we have given short shrift to the reinvention of the PC; in fact, we have given little notice to it at all. The numbers tell a great story of redemption and reinvention, but like all great tales that have to do with data, it is all in how you organize and interpret the data.
The consumer PC market isn’t dead. It looks a little different than it did in 2007, but the world looks different, too. While the business was slow to adjust, it’s now fair to say that it has adjusted, at least in the U.S. consumer market, which is where we focus. Using a modern, updated definition of a PC (and calling it a large screen computing device instead of a PC), the numbers don’t look like what some have come to expect.
For the first four months of 2016, unit volume of computing devices (tablets and notebooks) in U.S. retail fell 11 percent from the prior year. A weak showing for sure, but one tempered by the fact that the decline came solely from slate form factor tablets. The tablet market dropped by more than 30 percent as consumers either decided they didn’t need a new device or, when in the market for something, chose to step-up to the new hybrid 2inOne market. That decline represented a drop of over 1.2 million units in sales in just a four month period.
Traditional notebook PCs fared slightly better during this period, but still struggled as sales volumes fell by 7 percent versus the prior year. In the first four months of 2016, clamshell notebooks actually outsold plain vanilla slate tablets by nearly 1 million units. Notebook sales growth came from two segments - both very interesting for their representation of what the new reality of personal mobile computing has become. The leader in the segment was the entry-level notebook PC. Basic Chromebooks and low-cost Windows notebooks have taken the market by storm over the last couple of years. Sales for notebooks under $300 jumped 12 percent and now represent almost 40 percent of the traditional PC notebook market. The other growth area in traditional computing is high-end PCs. Sales for Windows notebooks above $700 grew by 10 percent during the first four months over the same period in 2015 (and exceeded the growth in Mac OS based notebooks); and at the end of the period they accounted for 18 percent of all high-end notebook sales - a new high for Windows.
At least some of the improvement in Windows can be attributed to the halo effect of the star segment in the personal mobile computing, which is the hybrid 2inOne. Sales in this segment, which includes products like the Yoga, Microsoft’s Surface products, and the iPad Pro, soared by 76 percent over the previous year and represented almost 20 percent of all mobile computing devices. This is the new face of personal computing: hybrid devices that are part tablet and part productivity tool. While the iPad Pro has been a runaway success, accounting for 18 percent of sales for the first four months of the year, it should be noted that the remainder of the market grew by more than 40 percent. That other segment was led by Microsoft’s Surface products, although they accounted for just 10 percent of hybrid sales with the remaining 70 percent made up of a mixture of traditional PC OEMs that now have an entree into a more compatible tablet like space that sits adjacent to the PC, and new low-cost providers like Nextbook.
Far from collapsing, a re-examination of the mobile computing market shows that while there are challenges, as there are for all consumer electronics devices in the highly-saturated U.S. CE marketplace, the mobile computing industry has successfully reinvented itself, propelled by a mixture of premium and entry-level traditional products, as well as a growing interest in the hybrid 2inOne space.