The PC Industry of the Past Is Not the PC Industry of the Future

by Ben Bajarin   |   April 19th, 2013

We are, without question, an industry in transition. The 500 lb. gorillas who once dominated the technology industry are experiencing and undergoing major transitions and a new type of growing pain. And for many, this is extremley painful. These titans will rise or fall based solely on their ability to manage this transition and these new types of growing pains. So what is growing exactly? The opportunity.

From Business to Consumer

For the past 30 years, the computing industry only appealed to a small group of people–namely the business community. Many companies from Microsoft, IBM, Dell, HP, Intel, RIM, etc., got their start bycreating products and solving problems for a business user. What many of these companies are learning is that business users are as different as night and day than ordinary consumers. In fact, I specifically peg Apple’s turnaround to this observation. Apple has and always will be a consumer company. They simply struggled until there was a true consumer market. Now they find success where others have not simply because they have always had a vision of creating products for ordinary folk. Apple simply had to wait more than two decades for their true market to emerge. Now, emerge it has and it is billions strong.

A key point signaling this shift was the recent news about the PCs decline in Q1 sales. Who usually bought PCs in bulk in the first half of the year? It wasn’t consumers. It was businesses. In years past the bulk purchases of enterprise and business buyers helped offset the lack of consumer spending for PCs in this buying cycle. With business shifting to BYOD, it’s doubtful the first half of the year will yield the volumes it once did. What we are witnessing in clamshell PC sales is not really massive declines. It is simply the new normal.

The consumer market will dwarf the business/pro market by magnitudes. The PC industry of the past, is not the PC industry of the future. The opportunity has shifted from business to consumer and it is growing faster than many anticipated. Many were not prepared and the pain of this reality has been life changing for all PC vendors.

From Stationary to Mobile

We were not meant to sit at desks. Yet that is exactly the paradigm that desktops and notebooks brought. Innovations around mobile devices are among the most important innovations for the PC industry of the future. When we first learn to ride a bike we don’t just sit on it and not move. We take it out and explore the world. Smartphones and tablets deliver on a truly mobile computing vision and we are barely scratching the surface of mobile computing. There is still massive software innovation ahead and we still don’t have devices that truly know anything about us. Anyone who believes innovation is dead is wrong and lacks vision. We still have billions of new customers to bring into the digital age and they want innovative products, Many that have not even been invented yet.

At the moment, we are in an adoption cycle phase, not an innovation phase. Why should we expect revolutionary new smartphones, for example, when half the planet doesn’t even have their first smartphone? Do we expect revolutionary new cars every year or even every few? Until the advancements of hybrid technology the industry had hardly changed in decades. People don’t freak out and scream about the collapse of Toyota because they don’t release a revolutionary new car every few years. It’s not a perfect analogy, I admit, but I do believe the consumer market for automobiles brings out applicable insights for the PC industry of the future.

The companies I am not worried about and the ones who will be in the PC industry of the future understand mobilility and understand consumer markets. Right now that is a very short list.

This is also the crux for many who are experiencing growing pains. They have the wrong definition of mobile computing. Couple that with a lack of understanding of consumer markets and it is bad news for the traditional PC vendors unless they really get the mobile religion and deliver mobile products that meet the needs of all their current and future customers.

Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research. He is a husband, father, gadget enthusiast, trend spotter, early adopter and hobby farmer. Full Bio
  • Glaurung-Quena

    “We were not meant to sit at desks”

    That’s a very foolish thing for you to say. We “weren’t meant” to drive cars, or live in climate controlled houses, either. People have been doing things at desks since the invention of writing. A desk is a basic tool for any kind of activity that involves writing, drawing, calculating, or dealing with papers and documents. Desks are as fundamental to civilization as writing and bureaucracy and paperwork. Your “not meant to sit at desks” statement comes perilously close to sounding like the twaddle emitted from mobile enthusiasts who foolishly declare the end of the desktop computer, or the end of the keyboard.

    What I think you were trying to say is that computers have until now been chained to desks, if not literally by cables, then functionally by the nature of the keyboard interface. It’s not that the nature of computing is changing forever, it’s that it’s *expanding radically* to encompass a wider array of activities and ways of using computing devices that don’t involve typing at a desk-like surface. But the old ways of computing, with keyboards and mice at desks, are still going to be around for as long as we continue to have writers and bureaucrats and managers and accountants and paperwork, or in other words, for as long as we continue to have civilization.

    Just as every first world home has both a couch and a desk or table, one for lounging about, the other for filling out forms, writing school papers, etc, in the computing landscape of the future, those who can afford it will own (at least) two computers, one that can be used at a desk with a keyboard for doing all the writing and calculating tasks that demand to be done at a desk, and a second one without a keyboard, that can be used everywhere else.

  • Glaurung-Quena

    Typo: “The companies I am not worried about and the ones who will be in the PC
    industry of the future understand mobililty and understand consumer
    markets. Right now that is not a very short list.” Did you mean that right now, that IS a very short list?

    • benbajarin

      Yes thanks.

  • Rich

    “Apple simply had to wait more than two decades for their true market to emerge.”

    Ben,

    Motorola introduced a very small cellphone around 1990: the MicroTAC, and it was a flip phone. But it only made calls and I think it sold for well over $1,000 – and that was in 1990 dollars. I’m wondering what would have happened if Apple had been able to introduce the iPhone or the iPad in 1990, and I’m postulating that it would have been as affordable in that time as the iPhone and the iPad are in today’s time. I don’t immediately see a reason why either of those products wouldn’t have sold well – maybe very well. This makes me think that it wasn’t the market that Apple had to wait for, it was technology, because the technology to create the iPhone or the iPad didn’t exist in 1990. That didn’t come along until the middle of the last decade.

    • benbajarin

      Even in that scenario the customer for the MicroTAC and even the StarTAC line was a business / professional audience. Not your average consumer. I really don’t believe we had a true consumer market for personal computers, which led to the adoption of smart phones and tablets, until the mid 2000′s.

      There was a market for broad consumer electronics but not computing. That audience was still a business / pro audience.

      In one of our industry presentations we point this out. That the first 25 years was bringing computing to a business audience. The next 25 years will be bringing computing to the masses.

      • http://twitter.com/qka qka

        For the mobile phone, more important to the consumerization than hardware were changes to the network and associated costs. Early mobile phone service was EXPENSIVE. That made it’s use acceptable to those who could afford it, primarily business users. As the rates came down, and “unlimited” plans happened, then mobiles became a consumer item.

        • copy_editor

          Yeah, network — especially internet, which provides content for consumer consumption. My parents wouldn’t have an iPad or iPhone if the internet wasn’t available on them.

      • Rich

        I don’t agree with you that there was no consumer market for computing.
        “During the early 1980s, home computers were further developed for household use, with software for personal productivity, programming and games. They typically could be used with a television already in the home…
        The Commodore 64, totaled 17 million units sold, making it the best-selling single personal computer model of all time. Another such computer, the NEC PC-98, sold more than 18 million units.” (From Wikipedia.)

        Note that they’re talking about the 1980s.

        I think an *affordable* iPhone or iPad would have sold well in 1990, because both of them are extremely attractive to consumers now and I think either one would have sold at least reasonably well in 1990 – again, if it was affordable.

        • benbajarin

          So i’ll clarify by saying the consumer market, which was simply an early adopter market in the time period your talking about, was very small compared to the recent one.

          Yes the key was price + functionality in order to get to the late part of the adoption cycle, which is the largest one. So partly technical but also time to get to where we are today.

        • Herding_sheep

          I don’t know if you remember when the Apple II and the Macintosh first came out, but the common theme in the media at the time was “wow, this is really amazing, but what do I need one for? What will a computer do for me?” There’s many interviews with Steve Jobs trying to sell the idea of a computer in every household, because the interviewer would ask him, “convince me, what exactly do I need a computer for?”

          It really wasn’t until the first spreadsheet application on Apple II came out, when people started to realize “wow, this thing can be a really powerful tool.” Yes, a SPREADSHEET app. Thats a business tool. The PC industry began its adoption phase with business adoption. There was all kinds of doubts and questioning about the purpose of owning a computer until business applications arrived and businesses started to adopt it.

          To add to Bens points in the article (which I agree with 100%), business adoption really drove consumer adoption in the early days of the PC. Thats partly why Windows won. And it was because of these business-suited applications started to make people realize the value of a PC. The tides have turned today, the market has become increasingly consumer-centric instead of the other way around, and now consumer adoption is influencing business adoption (hence the whole BYOD phenomenon). I think this change in adoption influence has been a huge part of iOS’ domination in enterprise tablets/smartphones.

          • steve_wildstrom

            Visicalc came out in 1979, not that long after the Apple ][ (tech time moved slower back then.) But most people had no more use for a spreadsheet than they did for a personal computer.

    • steve_wildstrom

      Not long ago, I was cleaning up some stuff and came across and old StarTAC (I think that’s the phone you are remembering as small; the MicroTAC, despite its name, was small only in comparison to the original DynaTAC.)

      I was startled by how big the StarTAC was in comparison to, say, a Motorola RAZR. We remember it as tiny only because everything else of that era was so big.

  • FalKirk

    Nice article, Ben. I tend to focus on the shift from pixel specific input to touch input but I don’t focus enough on the shift from computers as primarily a business solution to computers as a consumer product. Good insights.

    • Zaini Chia

      Both of the shifts (mouse to touch, and business to consumer) are very impactful transitions that is causing a sea wave of change in the computer industry, I think.

      Perhaps the biggest advantage of focusing on consumer use cases first, enterprise second, is that its easier to adjust consumer products to enterprise use; but not so much the other way round. By installing some good software and services installed on an iPad, and a keyboard, you can get a pretty good machine for business use. But a boring, black, plastic laptop will never ever have the appeal of an iPad.

  • David Olson

    Ben, you have tied a number of important observations together in this post, each worthy of separate development. I agree that there are unrealistic expectations of revolutionary developments in the area of smart phones. There have been some significant “evolutionary” changes after their initial “revolutionary” introduction. A bigger screen or a different “skin” are not revolutionary. I hope smart phones would be more like bicycles in integrating new technologies in useful and interesting ways than the Detroit auto industry, dressing up old technology in Chrome and paint to give the illusion of radical changes.

    • Rich

      You think the massive amount of electronics in 2013 American cars (such as SYNC with MyFord Touch) is old technology? Have you been paying any attention to Detroit?

      • steve_wildstrom

        In fact, the information technology in cars is about to get very interesting. Cars will be an important demonstration of the value of the internet of things as we get the safety advantage of cars autonomously communicating with each other and with the transportation infrastructure.

      • David Olson

        I would have thought the Chevy Volt a better example of technology potentially changing the auto industry. There are indeed some changes happening and more to come. But most cars sold are essentially old technology shaped and painted to seem new compared to the previous models.

        • steve_wildstrom

          If you think cars–even conventional old internal combustion cars– are old technology, you haven;t looked closely at one lately. The accelerator, which used to control a carburetor throttle through a rods-andcable linkage is now part of a fly-by-wire system controlling computerized fuel injection. Computers control your brakes and the differential(s). My Acuras won’t let me lock the keys inside. There’s not a lot in a car that a mechanic of, say, 1975, would recognize.

          • John Smith

            On the other hand, most people could use a car from 50 years ago as a daily driver, assuming it was in perfect condition. A computer from 50 years ago, even in perfect condition, would be totally worthless. The engineering of cars has improved greatly. The technology, not so much.

  • Chaka10

    I agree, very much so, with your point that massively disruptive innovation is not something that can be routinely manufactured. It depends on the confluence of many technologies and other necessary ingredients that involve the efforts of many participants — not just many companies but even many industries. The success of the iPhone depended on, and brought together in a single wonderful device, advances in (a) telecom technology (not until 3G has data bandwidth been sufficient to support much of what is possible with a smartphone), (b) memory/storage (solid state, etc) (c) battery, (d) screen technology, (e) miniaturization, (f) RISC computing (ARM), (g) manufacturing, …. How much, if any, of that was up to Apple, to manage or accelerate? Even if Steve Jobs dreamed up the iPhone (Apple did have the Newton), it couldn’t have been successful any earlier than it WAS successful…. The magic of Apple is to seize the moment with the right device/product, WHEN the moment is there to be seized.

    I also agree that mobile has been a true revolution and the possibilities are still developing…, HOWEVER, I respectfully disagree to the extent your analysis underestimates either the importance of the enterprise and or the time users spend at a desk, and thus “PC” (that’s not necessarily to say a Wintel PC). The folks who buy smartphones are generally “working” (whether that’s at a job, at school, whatever) during the day and only a portion of that activity is mobile. Various recent studies of smartphone usage patterns during the day (e.g., Jumptap MobileSTAT, Flurry) have confirmed this — smartphone/iPad usage goes up at night. That may erode a bit if the, so far massively iOS dominated, tablet penetration of the enterprise continues, but there are simply too many things at work that are still best done on a PC (again, not necessarily Wintel). The enterprise environment (especially larger enterprises) values conformity and uniformity for many reasons unlikely to change (ease of management, costs, security, etc). BYO is real, but I believe that’s in no small measure because it has mainly involved iOS devices, a HUGE advantage of which IS uniformity, conformity, and security (from malware, etc. as well reported). I believe Apple has both an opportunity and a need to serve the enterprise. It wasn’t a good result for Apple, the last time Apple users were forced to choose between what they preferred at home, and what they were required to use at the office…. Circumstances are very different now, but …

  • http://geekfun.com/ Erik S.

    These are important points, but it seems there is something even more fundamental at work here, right? I mean, what do the two observations you’ve made have in common? What is the fundamental trend that underlies both transitions, and what does it hold for the future?

    I’ve been thinking about this a lot and I’ve just started developing my thinking here (http://cortex.enkephalon.com) , I’d love to know your thoughts, um, once I integrate some sort of commenting system.