The desktop computer was more hobby than business until the early 1980s, when International Business Machines (NYSE:IBM) launched its PC. That event helped create a technological revolution, and gave birth to one of the world’s largest markets.
It’s true that part of the weakness is from the slowing global economy. While many might complain about things like computer speed, unless your hardware outright fails, a new PC is an easy investment to put off.
Which in turn demonstrates another problem — market maturity. Most of the movement isn’t coming from finding new PC customers, but from people replacing old computers.
Yet, the biggest issue for the PC world isn’t global sluggishness or a saturated market … it’s the mobile revolution.
According to IDC, the number of tablets is expected to boom from 107.4 million units shipped this year to 142.8 million in 2013 — and a whopping 222.1 million units by 2016! And smartphones — which don’t wholly replace computers, but have cannibalized many of the tasks (social media, search) traditionally performed on PCs — are expected to ship 1.16 billion units in 2016, more than double the number shipped in 2011.
Of course, the company that anticipated and most deftly acted toward this megatrend is Apple (NASDAQ:AAPL), whose iPhones and iPads have become the gold standard while many old tech operators are still trying to catch up.
A key reason is that these companies do not have the right talent and infrastructure to build effective mobile platforms. Remember, Apple had a huge advantage thanks to its long history with the iPod.
Hewlett-Packard probably is the most vulnerable of the old tech operators, as it dumped its tablet last year. Dell, too, has launched a variety of failed offerings. But it’s not just PC makers who could get left behind — a number of members of the PC ecosystem could be rattled by the winds of change.
Iconic chipmaker Intel (NASDAQ:INTC) hasn’t just been spinning its wheels. The company has been using its cash flows to diversify its business into software, such as with its acquisition with McAfee, and it has positioned itself to benefit from the cloud-computing revolution, which will increase demand for servers.
But while those moves should help diversify its business, a majority of Intel’s revenues still come from the PC business. Intel does have a robust pipeline of mobile-centric chips, which could help combat the company’s expected sluggish growth. But their success is a huge “if,” especially considering Intel’s lack of success with mobile systems in the past decade, as well as the fierce competition posed by the likes of Samsung and Qualcomm (NASDAQ:QCOM).