We’ve mentioned in the past that analysts have been predicting most of the IT spending growth for 2013 would ride the back of mobile technologies. It’s now looking like those predictions are being fulfilled even more than expected. Bloomberg is now saying that the PC market experienced the worst slump on record in the first quarter of 2013:
Personal-computer shipments plummeted in every region of the world in the first quarter as buyers opted for smartphones and tablet computers and Microsoft Corp. (MSFT)’s newest operating system met with weak demand.
Global PC unit shipments fell 14 percent in the first quarter — the worst such decline on record — to 76.3 million, a bigger drop than the 7.7 percent decline IDC had forecast, the market researcher said in a statement yesterday. The slump was the steepest since IDC began tracking shipments in 1994.
The last time worldwide PC shipments experienced a double-digit percentage decline was in the third quarter of 2001, when the market was roiled by the Sept. 11 terrorist attacks and the impact of a decline in technology stocks, Chou said.
Microsoft, based in Redmond, Washington, introduced the latest version of Windows and a tablet called Surface in October to appeal to consumers, who are increasingly adopting mobile devices to surf the Internet, access e-mail and store pictures, music, documents and other information.
This has a profound impact on the PC ecosystem as a whole. For instance:
- Both Intel and Microsoft are obviously going to be hard-hit. Not only does Microsoft lose Windows sales, it has a downstream effect on purchases of Microsoft office.
- This will impact Microsoft’s ability to fight in the Great Tech War. In a sense, cash cows like Windows and Office might be likened to industrial production capacity during World War II. They are the engine that allow you to fight the battles in other places. If those cash cows are severely impacted, Microsoft will be forced into tough choices over time. Given it’s huge cash position (nearly $70B in January, 2013), however, those choices can be put off for quite a while, but even this tremendous war chest could be consumed quickly if things continue to go south.
- There will also be a ripple effect to thousands of other companies that play in the Wintel ecosystem. The biggest problem is that the mobile devices being sold instead of PCs are largely closed systems. Apple and Samsung will benefit mightily if mobile devices replace PCs, but there is a lot less room for the rest of the PC ecosystem to play with these devices. Sure, you can find a zillion cases for your iPhone, in every color of the rainbow and zebra print, but that’s a $15 sale, not a $100 peripheral. Yes, there are things like add-on Bluetooth keyboards for iPads, but it falls off quickly after that.
- ARM sales are going to be increasing. Most of the high-volume mobile devices from Apple, Samsung, and others are based on ARM. We’ve covered some of the ARM vs. Intel debate previously.
Exit quote from the Bloomberg article:
“Windows 8 sold over 60 million licenses in its first few months, a strong start by any measure,” Mark Martin, a spokesman for Microsoft, said. “Along with our partners we continue to bring even more innovation to market across tablets and PCs.”
It would be a strong start for anybody but Microsoft. When you’re the king of the hill, you need more than this. A PC market decline of this magnitude can only be taken as an ominous start to 2013 in the halls of Redmond.