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Is the PC in a death spiral?
It's no secret that tablets like the iPad are putting a dent in PC sales. Yet after a bruising first quarter of 2013 (1Q13), market research firm IDC says that Microsoft's lackluster Windows 8 operating system (OS) -- the company's stab at the booming tablet market -- is only making matters worse for PC vendors.
The PC market tanked during 1Q13. Worldwide shipments reached just 76.3 million units, a 13.9 percent decline compared to the same year-ago period and a worse showing than IDC's own forecast of a relatively modest 7.7 percent drop.
In fact, PC vendors experienced the worst decline in nearly 20 years that IDC has been tracking the market.
"The extent of the year-on-year contraction marked the worst quarter since IDC began tracking the PC market quarterly in 1994. The results also marked the fourth consecutive quarter of year-on-year shipment declines," said the company in a statement.
If PC makers were hoping that Windows 8 would reverse the slide, they were sorely disappointed, according to IDC's program vice president of Clients and Displays, Bob O'Donnell. "At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," he said in prepared remarks.
Microsoft's efforts to bridge the worlds of desktop and tablet computing have fallen short, argues O'Donnell. "While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices," he added.
HP was the number one vendor in 1Q13 with 15.7 percent share of the market. The company shipped nearly 12 million PCs, a 23.7 percent drop compared to the same quarter a year ago (1Q12).
Second place Lenovo is faring better than the competition. The Chinese ThinkPad maker managed to ship practically the same number of PCs in 1Q13 as it did in 1Q12 (11.7 million PCs). Rounding out the top five are Dell, Acer and ASUS, all of which suffered declines. Acer was particularly hard hit. The netbook maker suffered a 31.3 percent fall in shipments compared to 1Q13.
IDC Research Director David Daoud believes that PC vendors have a lot of soul searching in the months and years ahead. "The industry is going through a critical crossroads, and strategic choices will have to be made as to how to compete with the proliferation of alternative devices and remain relevant to the consumer," he stated.
"Vendors will have to revisit their organizational structures and go to market strategies, as well as their supply chain, distribution, and product portfolios in the face of shrinking demand and looming consolidation," concluded Daoud.