The computer industry continues to experience tough times, as evidenced by IDC’s preliminary 1Q16 shipment numbers and Intel’s recent quarterly earnings data. Charles Arthur wrote a good column on the topic last week. I’d like to dive deeper into one of the fundamental issues facing the industry — declining consumer demand for home PCs. The fact is, fewer consumers are replacing their old desktops and notebooks in mature markets and, in emerging markets, they’re simply not buying that first PC at all, choosing tablets and smartphones instead. The result is a shrinking consumer PC installed base which will, in time, lead to a diminished demand for consumer-focused PC apps and services, creating a vicious circle. It seems the power and complexity that keeps the PC relevant for commercial use cases is now working against it with consumers. The industry seems unable to articulate a compelling reason why that should change.
IDC’s top line PC numbers tell the broad story and survey results help shed light on the details. In 2005, worldwide shipments of PCs totaled 208.8M units and consumer purchases made up about 40% of that total. Over time, an increasing number of people bought PCs to use at home for a range of tasks but more specifically to access the internet. By 2011, PC shipments worldwide peaked at 363.8M units and the consumer share grew to 54%. That year was the height of consumer PC shipments.
In 2012, the entire PC industry began to contract and the impact of smartphones and tablets on device spending started to become evident. By 2015, consumers constituted about 49% of a diminished worldwide PC shipment total of 275.8M units. IDC’s worldwide forecast numbers show consumer shipments continuing to decline in terms of shipments as well as the percentage of the total PC market throughout the five-year forecast period. And, while commercial shipment volumes will eventually stabilize, there’s currently no expectation consumer volumes will do the same.
A review of IDC’s massive, multi-country ConsumerScape 360 survey of digital consumers shows several clear and troubling trends when it comes to current consumer PC owners. Chief among them: fewer are using their PC for daily tasks. Over the years, we’ve polled respondents about their use of the PC for a wide range of tasks and tracked what percentage said they did particular tasks on a daily basis. For example in 2012, more than 90% of computer-owning respondents said they checked email daily on their PC. By 2015, that number had decreased to about 65%. During that same period, the percentage that used a PC daily for online search declined from 78% to 61%, reading online news slipped from 66% to 53%, and social networking dropped from 66% to 55%. The survey doesn’t illuminate the why behind these declines, but it seems pretty clear that, for many, the PC is simply overkill for the task at hand, tasks better served by simpler devices such as smartphones and tablets. When we asked the same task use questions of tablet and smartphone users, as you might expect, the percentages using them daily went up over the same period.
Equally troubling in that same large survey, when we asked current computer users in 2015 about their future PC-purchase plans, a sobering 65% said they had no plans to buy a new PC in the future. When we asked respondents who currently owned a tablet, smartphone, or television (but not a PC) about their PC purchase plans, 69% said they had no intention of buying one. (Note: IDC is currently fielding the 2016 version of the survey.)
Many of the top PC and component vendors in the industry like to point to the large installed base of aging PCs and suggest it is just a matter of time before their owners replace them with new ones. While this perspective likely still applies to much of the commercial installed base, it seems increasingly clear it’s not true when it comes to the consumer installed base. In highly penetrated PC markets such as the United States, there was a time when it wasn’t unusual for a home to have multiple PCs. It seems unlikely this will be the norm going forward. The best case scenario is likely to be that over time, as these multiple PCs age out, many households will buy a single new PC to continue to do the decreasing number of tasks to which tablets and smartphones remain ill-suited. An increasing number of these replacement devices will be detachable products such as Microsoft’s Surface Pro, a category IDC currently counts within its tablet numbers.
While the overall PC market is contracting, the weakness in consumer demand is having a dramatic impact on those vendors that traditionally drive significant consumer shipment volumes. As widely noted, Apple has been the exception here. It is is fair to argue that few within the PC industry, save Microsoft itself, is in a position to replicate the tightly coupled hardware, OS, and services offerings that Apple has put together on the Mac. An equally important aspect of the Mac’s success is the growth of the iPhone and the company’s ability to drive a better experience for those consumers who buy both. This is an area other hardware vendors who play in both the PC and smartphone markets clearly need to explore but their dependence on Microsoft and Google for the underlying operating system will make this exceedingly difficult to replicate.
In the end, it is hard to envision a broad consumer PC rebound. Microsoft has served up a good operating system in Windows 10 and hardware vendors are creating compelling products. But a PC is still a PC, with all the good and bad that entails. It seems many consumers have simply moved on.
24 thoughts on “The PC Industry’s Consumer Conundrum”
Interesting, thank you.
Around me, I’m not seeing PCs decommissioned, rather allowed to linger since there’s no reason to upgrade (SSDs have been retrofitted, USB3 is nice to have but not required, HEVC is not required yet, RAM/CPU/GPU are of no concern, Win10 will run fine). The bright spot is they’re still being used for stuff Mobile can’t do, or can’t do comfortably.
Is it possible that retrofitting is part of the process to decommission?
About as much as changing the tires on your car is part of the process of retiring your car ?
I’m not sure about that analogy. Maybe you have a better one to fit.
I think you might have a point, but it appears to me that your example sounds like: “this PC is approaching end of life.”
What’s your expectation for PC life expectancy? Do you expect to use the computer till it dies, or have you noticed an accounting approach where once the depreciation schedule is used up, it’s ready to replace with similar or with a tablet or hybrid solution?
In my experience, Consumers only replace a PC when the hardware or software is broken, no depreciation schedule.
Now that upgrading to Win10 is free and Windows very stable, and a mere SSD makes your computer feel 3x faster (it just boots and launches apps faster, but that’s what users notice), the only reason to replace a PC is… dust killing its coolers/airflow, or some part dying (and that part was usually the HDD… capacitors now ?).
My expectation of consumer PCs life expectancy around me is “by the time they need a new one, I’ll get them a tablet and a dock”. The only ones talking about upgrades are Mac users, because those (and laptops) have planned obsolescence in a way “box” PC don’t suffer.
” the only reason to replace a PC is… dust killing its coolers/airflow, or some part dying ”
Or you want to be able to take advantage of features of OSX / Windows that your old PC / Mac can’t provide.
Seriously, what features ?
I can’t think of any OS feature that a 10 year old PC doesn’t support. Virtualization w/ a low-end CPU ? But virtualization isn’t done by low-end consumers anyway, and not-low-end consumer CPUs have had it for a while.
Even on the hardware side, SSD are easy to swap in (except most macs and some laptops), USB3 is rarely required and a drop-in card away for desktops (again, except Macs and laptops), HEVC and VR are barely on the horizon (and HEVC can be done on the CPU in most cases, or the vidcard swapped again except Macs and laptops)…
Cortana, Windows Hello biometric features, Windows Ink
Cortana doesn’t require new hardware. The voice recog part of it is supposed to work better with fancy microphones, but it also works with a regular mike.
Hello does require a special camera and/or fingerprint scanner, but those can be retrofitted to desktops via USB, and precious few new laptops have them yet anyway. Also, not a hot topic at all for Consumers anyway. Maybe Entreprise ?
Windows Ink is backwards-compatible with any pen-enabled device., so not a reason to upgrade per se. I’ve had questions about Pen (not W.Ink specifically) from students, not older types, but no “I must upgrade to have it” moment..
I got a question about that: do people write faster than they type ? I know I don’t, on my Galaxy Notes writing felt less taxing on my brain / distracting than typing, but wasn’t any faster. Of course, sketching highlighting & annotating is nice.
“The only ones talking about upgrades are Mac users, because those (and laptops) have planned obsolescence in a way “box” PC don’t suffer.”
Wrote the troll.
The only ones talking about upgrades are Mac users”
In what way? I don’t hear Mac users talk about upgrades any more or less than other PC users, and those usually the same level of geek users, not typical consumer users.
I’ve looked into switching in an SSD for several Macs around me, it requires a special SSD, often special tools for opening opening the Mac, which has a non-zero risk of damaging something. Most everyone including me doesn’t feel up to it, and it is a lot more expensive than on the PC side (both special SSD+ special tools)
Compare that to a PC which is “buy any SSD, connect it via USB, run the migration software, replace your old HDD with with the SSD”. Tools required: 2 regular screwdrivers (medium for the box, small for the drives. Takes a few hours of drive cloning + 15 minutes actual work.
And no way to retrofit USB3 if you Mac doesn’t have it. On PCs: open the box, drop card in slot, shut the box.
End result: all PCs around me have SSDs, no Mac around me does, except the ones that have been bought very recently w/ the extra-cost SSD option. Even PC laptops, almost all have a replacement SSD.
Ah. Interesting. I’ve swapped out the HDDs in all my Macs to SSDs in just the manner you describe in about as much time. The only “special” tool I needed was a torx driver which came with my set of small screw drivers anyway.
I guess it is just a matter for comfort level. I remember when I replaced my daughter’s HDD in her Macbook her first year at GaTech and some of her male college friends watched in amazement. It wasn’t that hard. And they were all tech majors. Go figure.
I only have one MacMini I wish had USB3 that didn’t already (the one I use for my TV). But before that was even an issue I retrofitted the internal SATA connector to an external connection and just used a brick for HD power. That wasn’t that hard, either. I’ve since returned to an internal drive with a 1gig SSD.
But then I don’t consider any of that as “upgrades” per se. More like putting better tires on a car. The car itself didn’t change.
Must be a matter of Mac model… My iBrothers’ and his wife’s require prying the screen off with suction cups. iMacs, rather old.
When are we going to say/write “phones” instead of “smartphones”?
“An equally important aspect of the Mac’s success is the growth of the iPhone and the company’s ability to drive a better experience for those consumers who buy both.”
I feel like this bodes well for devices such as the iPad Pro as well, pending upcoming changes in iOS 10 and beyond, as the iPad becomes more Mac-like.
How many US population do use their laptop to view TV (including YouTube)? And how many TVs are used to view interactive content requiring keyboard? Does XBox Live Dia cover all the use scenarios?
SmartTVs and Games consoles only represent a tiny percentage of paid streaming content:
Apple dominates the TV EveryWhere market (paid streaming) according to the Adobe Digital Index in 2015 with a massive 61.2% market share of which 22.3% came from the iPad, 18.2% were iPhones and 12.8% was from the AppleTV.
All of the Android platform combined (tablets and mobile) only managed a 9% market share and the Windows PC 18%, Roku captured 7%, gaming consoles 2%, Amazon Fire 1% and SmartTVs a minuscule 0.7%.
I’ve been in the computer business (Mainly Mac) for over 30 years. These days it is all about selling an SSD upgrade. Much less than a new computer. Comparable speed. And much better profit. A win, win situation!
Very interesting data points, thank you. If possible, I think it would be nice to also see non-Mac average consumer selling price data. I would assume that it is going up, if the users who just want it for basic internet access are no longer on the market.
As a sidenote though, I do get the impression that we are beating a dead horse here. Maybe this is symptomatic of the current situation where we don’t have other significant bright things to look forward to in consumer tech hardware.
The article was written from the perspective of customer preferences for device format. I believe a significant factor is the cost of smartphones starving the PC market. Many families require the purchase of 4-5 smartphones at $500 each along with a $50 monthly service plan for each. This leaves no money remaining for PC purchases. The market has become infatuated with smartphones as the “cool” gadget and it has totally downgraded the PC market. There is a possibility that the PC market could be revived after the smartphone becomes old hat but it will require some innovation in the PC arena.
IDK. That sounds like saying “As soon as people stop thinking it’s cool to walk around with this tiny device with earphones to listen to music, boom boxes could be revived if they just innovate enough.”
If you see no difference in the functionality of a smartphone and a PC then you are correct. I just think that your analogy is somewhat lacking since an iPod and a Boom Box perform a single function while a PC, from my perspective, is capable of more functions then a smartphone.
You want a better indicator on PC’s? Ask how many homes don’t have a desktop. You will probably see the number has not drifted much in 10 to 15 years. THEN, ask how old is your pc. I like the latest and greatest, but my PC is an HP I bought 9 years ago and is currently running Windows 10 just fine. My PC is an appliance, the old workhorse that has all the stuff I don’t want to loose. Phones and Laptops and Tablets come and go, but the important stuff is on the PC. What really erks me is I’ve replaced 2 washing machines and a fridge in the time that I’ve had that pc….