Insight by Wee Teck Loo, Head of Consumer Electronics, Euromonitor International.
Acer Inc’s Chairman and CEO, JT Wang, tendered his resignation on 5 November 2013 after the company reported a net loss of US$446 million for the third quarter of the year and announced plans to reduce its number of staff globally by 7%. Just a week earlier, Dell Inc had announced the completion of its acquisition by Michael Dell (founder and CEO) to take the embattled company private. With the exception of Lenovo Group, all other PC manufacturers are struggling financially or are reporting declining sales every quarter. Retail sales of tablets are forecast to exceed 140 million units by the end of 2013, overtaking laptops as the most popular computer for consumers. The naysayers have started to declare the death of personal computers (PCs) – desktops and laptops - running on the Windows operating system.
Half of the Story
While there is no denying the rise of tablets, it is still too early to start writing the obituary for PCs. A significant portion of sales are driven by business and the PC market remains an attractive and significant one for manufacturers and retailers, with sales projected to exceed 300 million units even in 2017. Companies looking for cost-effective solutions can rely on desktops. And, more critically, the vast majority of legacy software that companies rely on was developed for PCs running on Windows, not tablets running on Android and iOS.
Old Habits Die Hard
The Global Consumer Trends survey conducted by Euromonitor International on over 16,000 people around the world shows that the PC is the most common device used by consumers. On a daily basis, nearly all consumers who own a personal computer use it at least once. Even consumers with tablets are not ditching their desktops and laptops.
For consumers in the emerging markets, mobile phones (especially smartphones) are a necessity, followed by desktops or laptops, whereas a tablet is a ‘nice-to-have’. The limitation of the tablet is that the majority require an internet connection via Wi-Fi to be useful. Desktops and laptops, on the other hand, work well even without an internet connection.
A Bigger Screen, a Bigger Challenge
The popularity of smartphones and tablets has prompted doomsday predictions for PCs, but the market undoubtedly has room for all these devices. While sales of PCs are forecast to decline over the forecast period, overall sales in both volume and value terms will still exceed those of tablets. Sales of laptops dominate in China, with even sales of desktops for business and retail in China being higher than those of tablets in 2013.
PCs remains an important and attractive market for both manufacturers and retailers as form-factor, battery life and performance are important purchase criteria for consumers. To ensure their continued relevance, PC manufacturers will have to constantly innovate to ensure improved laptop battery life for a whole day’s usage while also working to reduce overall size and weight. Manufacturers and retailers also need to communicate the value of PCs to younger generation consumers, who have grown up browsing the internet on their mobile phones and no longer see PCs as a productivity tool but rather another screen for their infotainment.
