The Untimely Death of the Personal Computer

As the venerable personal computer turns 30 years old, it may seem heretical to predict its demise.  However, the PC appears headed for an early grave as demand for mobility and portable information is pushing consumers toward new high-tech devices.

No less authority than Mark Dean has predicted the personal computer will go the way of the "vacuum tube, typewriter, vinyl records, CRT and incandescent light bulbs."  Dean's words carry added weight because he once held the title of chief technology officer at computing Goliath IBM.

Market trends support Dean's prediction.  Sales of personal computers have slowed dramatically in the past 18 months, while demand for tablets and smartphones has exceeded forecasts.  Mounting evidence suggests that tablets, in particular, are being snapped up as replacements for personal computers.

The news could not come at a worst time for the computer industry. PC shipments declined 6.6 percent in the fourth quarter of last year. In the most recent quarter, shipments rose only 3.2 percent, significantly below historical averages.  Analysts had forecast sales growth this year of 13.6 percent.

Despite the modest quarterly gain, consumer appetite for personal computers in the United States, Canada and Europe has waned.  The computer industry was able to eke out a sales increase, thanks to growing demand in emerging markets, such as China, India and Turkey.

Even with a three-decade head start, personal computer firms are in danger of being swamped by a tsunami of competition.  Data indicates that for the first time in history more smartphones have shipped this year than personal computers.

Smartphone sales reached 115 million in the third quarter, a 42 percent increase from the same period a year ago.  Worldwide sales of smartphones are predicted to top 468 million this year, according to Gartner, a tech research firm.  By comparison, Gartner forecasts 352 million PC's will be sold in 2011.

If smartphone sales are sizzling, then tablets are on fire.  Apple, the market leader with its iPad, expects to sell 40 million tablets this year.  The year over year growth is north of 342 percent.  iPads are selling at a rate of 1.22 every second of every day.  Data shows consumers are junking their notebook computers in favor of iPads.

The Apple juggernaut has captured 61 percent of the tablet market in spite of fierce competition.  In its most recent quarter, iPad sales topped $6 billion.  The tablet has become the top selling consumer electronics device ever in a little over 18 months.

While tablets are cannibalizing consumer PC sales, smartphones are invading the personal computer's business turf.  More smartphones are being linked to enterprise applications once reserved for PC's.  Medical centers, universities, small businesses and even auto companies are swapping smartphones for PC's.

Worst of all, most of the largest computer makers have no PC alternatives.  None offer smartphones or tablets, except HP.  The firm purchased Palm in April of last year, but has stumbled in the market.  HP introduced a flashy tablet earlier this year then quickly withdrew it because of moribund sales.

What's behind the rapid ascent of smartphones and tablets?  There are two chief reasons for the growth: technology advancements are leveling the playing field between smartphones, tablets and PC's; and, users are demanding anywhere-anytime access to personal and public data and information.

Today's smartphones have more computing power than the average PC's of just a decade or more ago.  Most smartphones have storage capacity of 16 to 64 gigabytes.  A desktop computer in 1998 typically could store up to two gigabytes.  The computer of that era had 64 megabits of memory, compared to more than 256 megabits of random access memory for today's smartphones. 

The other disruptive trend for the computer industry is the demand for portable information.  Consumers no longer want to be shackled to a single computer to access their videos, photos, email, documents and music.  They want to get data and information whenever and wherever they happen to be.

While PC's are busy fending off smartphones and tablets, another competitor has emerged.  Smart televisions are entering the marketplace.  The new sets have built-in Internet connectivity, offer games, high-tech applications and a myriad of features that mimic those available on personal computers.

Despite all the competition, PC's will not disappear overnight. Increasing sales in foreign markets will continue to prop up the industry.  However, in time death will come slowly but surely for the PC.

For a 30 year old, that's a foreboding prospect.

Market Braces For Tablet Mania

When Apple ushered in the iPad era in April of last year, few experts envisioned the device would energize a once moribund market for tablet computers. In recent weeks, virtually every high-tech wannabe has unveiled plans for its own copycat machine. As a matter of fact, it would surprise no one if McDonald's offered a tablet with each Happy Meal.

The iPad's eye-popping sales figures have fueled a mad dash to capture the burgeoning market for touch-screen computers. In its most recent earnings report, the Cupertino, California-based firm announced it sold 14.79 million tablets in the last nine months, exceeding even the most optimistic forecasts. iPad sales in the final quarter were 7.33 million, signaling sales strength beyond so-called early adopter cosumer segment.

Market research firm IDC estimated that Apple accounted for nearly 90 percent of all tablets sold worldwide. What is more impressive is that Apple has invaded the corporate market, selling tablets to more than 80 percent of the Fortune 100 companies, according to Apple's chief financial officer.

In its latest forecast, Forrester Research predicted that tablet sales will more than double this year. By 2015, more than one-third of American consumers will own tablet computers, according to the tech industry research firm. No wonder tech firms are salivating.

Companies such as Toshiba, Motorola, Vizio and Samsung have rolled out their own tablet models geared to take advantage of consumer demand. Research in Motion (RIM) plans a 4G version this summer, forecasting sales of four million units. Those firms could be expected to follow Apple's lead, however, they aren't the only ones desperate to leap into the table wars.

Qualcomm, the San Diego based company that is a supplier of microchips, recently announced it had purchased Atheros Communications, Inc., which makes chips for tablets. More importantly, Atheros already has a business relationship with Apple, supplying chips for iPhones. Qualcomm spent $3.2 billion and never looked back.

As the competition heats up, it will be difficult for the firms chasing Apple to catch up. The company has such a huge lead in technology and market penetration that competitors will have to slash prices to make any dent in Apple's share. As the consumer market becomes saturated, expect the next battleground to be businesses.

Even as the competition scrambles to rush tablets to market, Apple is hatching plans for an updated version of its innovative iPad. The new model likely will debut in the summer.

With so many tablets flooding the market, not every firm can be successful. RIM and Samsung appear to be the best positioned among Apple's competitors. By next year, a number of companies will be retrenching because the demand cannot sustain the expected tide of tablet products.

However, there is no doubt of the winner in the tablet market. Apple has a clear lead and it is not likely to give up its position any time soon.