Growing consumer appetite for substitute devices will cannibalize about 10 percent of global PC sales by 2014, while smartphones are likely to displace some additional percentage of sales, particularly in developing markets, Gartner (News - Alert) analysts predict.
Growing user interest in media tablets such as the iPad also is affecting near-term sales, said Ranjit Atwal, research director at Gartner.
“PC market growth will be impacted by devices that enable better on-the-go content consumption such as media tablets and next-generation smartphones,” said Raphael Vasquez, research analyst at Gartner. “These devices will be increasing embraced as complements if not substitutes for PCs where voice and light data consumption are desired."
But there also appears to be other forces at work that will shift former PC demand, including the adoption of hosted virtual desktops, which can readily use other devices like thin clients, said Gartner.
Worldwide PC shipments are on pace to total 352.4 million units in 2010, a 14.3 percent increase from 2009, according to the latest preliminary forecast by Gartner. These projections are down from Gartner’s previous PC shipment forecast in September 2010 of 17.9 percent growth.
The reduced forecasts also apply to 2011 worldwide PC shipments, which are forecasted to reach 409 million units, a 15.9 percent increase from 2010, down from Gartner’s earlier estimate of 18.1 percent growth for 2011.
In part, the PC market, driven largely by replacement, is losing some of its ability to grow based on new features. In large part, PCs now are standardized enough that it is difficult to differentiate between devices based on hardware or software features or price. But the lack of major innovation also lessens a users' need to replace machines as often as used to be necessary, for reasons of technological obsolescence.
“PCs are still seen as necessities, but the PC industry's inability to significantly innovate and its overreliance on a business model predicated on driving volume through price declines are finally impacting the industry's ability to induce new replacement cycles,” said George Shiffler, research director at Gartner.
In the near term, many consumers and businesses will continue to refrain from buying PCs, as they collectively rebuild their finances in the face of slower income growth, weaker employment gains and a cloudy economic outlook, Gartner also notes. Over the longer-term, users are likely to slow PC replacements and extend PC lifetimes as they turn to other devices as their primary computing platform.
Consumers in the U.S. and Western Europe continue to postpone purchases in the face of financial and economic uncertainty. However, Gartner said that the bigger issue for PCs in the home market is consumers temporarily, if not permanently, forgoing PC purchases in favor of media tablets.
Emerging markets will represent more than 50 percent of the total worldwide PC market by the end of 2011, while pressures in mature markets grow. But even in emerging markets, the threat of cannibalization exists. There is good chance that consumers will simply leap frog PCs and move directly to alternative devices in the coming years rather than following the traditional pattern of purchasing a PC as their first computing device, Gartner said.
Media tablet capabilities are expected to become more PC-like in the coming years, luring consumers away from PCs and displacing a significant volume of PC shipments, especially mini-notebooks. Media tablets are rapidly finding favor with PC buyers who are attracted to their more-dedicated entertainment-driven features and their instant-on capability.
Emerging devices will have an important indirect impact on PCs by extending the average PC lifecycle. Traditional PC functionality will be spread over a variety of complementary devices. As this happens, analysts foresee users extending the lifetimes of PCs because there will be less need to replace them as often.
Hosted virtual desktops are not expected to earnestly impact mature professional and business markets until 2012, at the earliest. Longer term, users that adopt HVDs to access their compute capabilities will do so predominantly by using refurbished PCs and thin clients. These alternative devices will displace new PC units, thereby reducing expected future desk-based shipment growth.
The full impact of such connected device proliferation on mobile broadband demand is hard to forecast. Most "connected devices" ranging from Apple iPod Touch devices to netbooks, notebooks and tablets seem to be used primarily in WiFi (News - Alert) access mode, rather than using 3G or 4G connections. The salient exceptions are smartphones, which in the U.S. market tend increasingly to be sold with a required data connection.
To the extent that smartphone sales cannibalize feature phone sales, and that some percentage of PC replacement purchases are displaced by smartphones, there arguably is some upside for mobile broadband sales as a result of the shift. Beyond that, user familiarity with WiFi connected devices should stimulate some incremental demand for 3G or 4G access to those devices as well.