PC Evolution - Apple leads, Lenovo gains

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Estimates from Canalys this month show Apple continuing to lead the global PC market, with China’s Lenovo in a strong second place. Canalys includes tablets in its numbers, reflecting the impact iPad and other devices have had on the overall market.

Canalysis Q2 2013 PCs

Apple held a 17% share in Q2 2013, with 18.6 million units, of which around 15M were iPads. Lenovo’s 13% share was primarily PCs, with only around 1.5M tablets shipped. The other big winner was Samsung, with a 10% share, and growth of 106% year on year.

These numbers reflect two intersecting discontinuities, whose impact is still reverberating across the industry. These are the growth of the tablet form factor, dubbed the “post PC world” by Steve Jobs, and the eastwards shift of the global economic centre of gravity, in particular towards China. These transitions are still playing out, and history will be the final judge, but we can pinpoint their defining moments.

IBM-LenovoFirst was IBM's sale of its PC division to Lenovo, in 2005. Here was an iconic US organisation, the creator of the professional sales team, and the company that legitimized the mainstream PC business, selling this business to a Chinese corporation. There is no more symbolic gesture of the passing of the economic baton from West to East than this event.

PC EvolutionSecond was the launch of the iPad by Apple, 5 years later, in 2010. Job’s hailing of this as the start of the post-PC era shows every sign of being prescient, with Canalys among others forecasting that by the end of 2013 tablets will outsell notebooks. With hindsight it is entirely logical that a smaller form-factor focused more on consumption than creation would dominate large parts of the market, where the power of a full-fledged PC is overkill. This is particularly true for consumers and education, both fast-growing segments.

Third was the arrival of a tablet OS for the rest of us – Google’s Android 3 (Honeycomb) in 2011. The tablet market was no longer effectively the sole preserve of Apple, and Android-based devices have continued to eat into the PC market. Windows 8 is Redmond’s response, but the signs do not look good for Microsoft. Its Surface tablets are now deeply discounted, suggesting they have underperformed, and increasingly its major hardware partners, such as HP and Dell, are looking to Android to power their tablet offerings. Microsoft’s share of connected devices has dropped to less than 25%, according to Benedict Evans.

Microsoft Share of Connected Devices

The implications of these discontinuities will continue to play out. It is likely that Apple will continue to thrive, but will remain broadly in its chosen premium market position. Developers and advertisers will continue to be drawn to the Apple platforms, as this is where the bulk of the money is spent and earned. Apple’s lack of fragmentation will always make it a better target for accessory vendors as well.

Android will continue to gain share, in particular in the more price-sensitive segments, with many more vendors entering the market, especially in greater China. We can expect Lenovo to continue to move up these charts in the coming quarters, as will Samsung.

Geographically Apple and Google will increasingly be the US’s remaining bright points in the PC firmament. Wintel leaders such as HP and Dell will continue to slip down the rankings as they focus on higher-margin lower volume segments. Discontinuities always throw up opportunities, with winners and losers, and this period is no exception.

Go Canalys – PC Market Q2 2013

Go iPad

Go Lenovo Completes IBM PC Acquisition

Go Lenovo

Go Benedict Evans – The Irrelevance of Microsoft