For investors, it’s hard not to feel like the sky is falling on the PC market.
Apple’s (NASDAQ:AAPL) iPad is just the face of a looming wall between traditional PC devices and the coming decade. Who will buy laptops when everyone has a connectable smartphone and a tablet PC? Why will a company equip its employees with laptops and tablets when just the tablet will suffice?
And new data certainly seems to suggests a squeeze on PCs. Earlier this month, the research firm Gartner cut expectations for PC shipments growth in 2011 to 10.5% from 16%. As for 2012, PC market growth is now expected to be around 13%; Gartner had previously forecast 15% growth.
Tablet PCs like the iPad are the reason for the lowered forecast. As Gartner points out, the major growth in the PC market since 2005 has been from increased portable PC sales, both laptops and notebooks. However, the lighter, more portable notebook are particularly losing their relevancy as more tablets hit the market.
But with tablets in the works from both Hewlett-Packard (NYSE:HPQ) and Dell (NASDAQ:DELL), one would think that the PC makers will adapt quickly and tablet PCs will simply become a part of their overall PC sales.
ChangWave’s recent survey results published Thursday, however, paint a discouraging portrait. Of the 27% of the 3,000 respondents that planned on buying a tablet, 82% said they planned on purchasing an iPad. Dell and H-P’s devices weren’t even mentioned in the survey, relegated to the “Other” category on the purchase intent chart.
Nobody can dispute that tablet PCs are a growing segment but that segment has a long way to go before it dominates the computer market. According to a recent report from RBC Capital, 394 million smartphone and tablet users exist worldwide. This is compared to 1.2 billion PC owners who are more likely to purchase a low-cost Windows laptop than a $500 tablet with limited functionality.
Yes, the writing may indeed be on the wall for notebooks, but laptops, and even cheap desktop PCs, are still potent in the world market.
And don’t forget: even Apple’s PC business is growing—the company sold 1 million of its latest MacBook Air laptops in just two months at the end of 2010, its fastest selling PC yet. With Dell raising its guidance for fiscal 2012 above analyst expectations and Hewlett-Packard dismissing rumors that it’s preparing to sell off its PC business, investors should stand reassured that rumors of the PC industry’s death are greatly exaggerated.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.
