As tablets muscle in, PCs fight for foothold

Rumors of the death of the personal computer may be exaggerated, but the PC industry seems to be in limbo.
Rumors of the death of the personal computer may be exaggerated, but the PC industry seems to be in limbo.

Seattle - The death of the personal computer may be an exaggeration. But the industry surrounding personal computers seems to be in limbo.

Like the mainframe, which was said to be dead decades ago but has remained a meaningful business, the PC almost certainly will cheat death. True, mobile devices like the iPad will continue to gore PC sales. Those mobile devices, though, most likely never will satisfy spreadsheet masters, film editors and other workers who depend on multiple screens and the precision of a keyboard and mouse.

Still, there is a strong view among many longtime tech industry executives that the PC's relevance will diminish steadily.

"In my humble opinion, the PC as we have known it is in a continuous decline and being relegated to a utility device for businesses," said Hector Ruiz, the former chief executive of Advanced Micro Devices, a company that makes chips for PCs and other devices.

The mood around the PC industry has become increasingly glum. The business effectively is in a recession and there is no upturn in sight. During the second quarter of the year, global PC shipments fell around 11 percent, for their fifth consecutive quarter of declines, the worst downturn since the advent of the PC more than 30 years ago.

Intel, supplier of the chips in most PCs, and Microsoft, which makes the Windows operating system on the vast majority of those machines, have delivered disappointing financial results. A major overhaul of Microsoft's software, Windows 8, did not lift sales and may have made them worse.

The once-mighty Dell, deeply weakened by the PC slump, is mired in a struggle with shareholders over a plan to go private, seeking relief from investor pressure. In their bid to take the company private, Michael S. Dell, the company's founder, and the investment firm Silver Lake have argued that they would turn the company into a corporate software services provider.

While sales of PCs to businesses remain steady, demand among consumers has plunged, largely because people are instead spending money on iPads, Kindle Fires and other tablets.

Still, a reality check: More than 300 million PCs are expected to be shipped this year globally. That is a lot of widgets for a business that has caught a cold.

Tablet sales are growing explosively. This year, there are expected to be more than 200 million shipments of the devices, which will for the first time exceed shipments of notebooks, the largest category of PCs, estimates Gartner, the research firm.

Steve Jobs, the Apple chief executive who died in 2011, predicted several years ago that PCs would become something like trucks, workhorses used by many people but outnumbered by tablets, the cars of the technology business. (The analogy is somewhat undercut by stats: The most popular vehicle in the United States for several years has been a truck, the Ford F-150.)

One theory is that tablets are leading PC shoppers to postpone their purchases of new computers, perhaps by a year or two, but that eventually people will be ready for a fresh machine. "Replacement cycles are being pushed out," said Toni Sacconaghi, an analyst at Bernstein Research.

A more pessimistic view is that a lot of the consumer demand for PCs will never return. Daniel Huttenlocher, the dean and vice provost of Cornell University's new New York City technology campus, said consumers began buying PCs in big numbers beginning in the 1990s largely because no better device existed for getting on the Internet.

But the PC, he said, was always better suited as an office machine for the production of documents, presentations and other work. In his view, tablets are better for the consumption of content, whether that is watching Netflix or surfing the Web.

"There are way more consumers than producers, period, even in a world with lots of user-generated content," Huttenlocher said.

In the first quarter, 53 percent of computer shipments were to the consumer market while 47 percent were to the commercial market, estimates the research firm IDC.

Many consumers will still favor PCs for tasks like editing home movies and writing term papers. But tablets are already invading the turf of PCs in many professional niches, from flight manuals for airline pilots to cash registers in restaurants.

The incumbents in the PC industry - especially Microsoft and Intel, the software-chip duopoly with the most to lose from the decline of the business - have a seemingly straightforward response: redefine the PC to make it more tablet-like. Microsoft designed Windows 8 to work well on touch-screen devices. If users tire of finger gestures, they can switch to a classic Windows desktop interface that they can operate with a mouse and keyboard.

Intel, meanwhile, has refined its chips so that they are more thrifty with their consumption of battery power, an important requirement for mobile devices.

The changes have given rise to a frenzy of crossbreeding in devices, effectively blurring the boundaries between PCs and tablets. There are now notebooks that turn into tablets either by flipping their screens or through fully detachable displays. Many otherwise ordinary notebooks come with touch displays for quickly jumping between different modes of operation.

Microsoft and Intel are betting that devices coming out in the fall will finally get PC shoppers back in stores. Microsoft plans to release a new version of its operating system, Windows 8.1, that responds to complaints its customers had with the earlier version.


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