Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Netanyahu deletes tweet featuring photo of James Foley

Read more

THE WORLD THIS WEEK

The World This Week - 22 August 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - 22 August 2014

Read more

FRANCE IN FOCUS

FRANCE IN FOCUS

Read more

FOCUS

Lifting the veil over China's air pollution

Read more

ENCORE!

Tango Takeover in Paris

Read more

WEB NEWS

Calls for ISIS media blackout after execution of James Foley

Read more

IN THE PAPERS

'Steely resolve of reporters exploited by pared-down employers'

Read more

BUSINESS DAILY

US judge calls Argentina bond swap offer illegal

Read more

  • Europe launches navigation satellites to rival GPS

    Read more

  • Besieged by problems, Hollande faces unhappy return from summer holidays

    Read more

  • Iraqi Sunnis quit govt talks after mosque massacre

    Read more

  • US demands Russia withdraw aid convoy from Ukraine

    Read more

  • PSG fall flat once more against Evian

    Read more

  • Fed Chair says US job market still hampered by Great Recession

    Read more

  • August 22, 1914: The bloodiest day in French military history

    Read more

  • Central African Republic announces coalition cabinet

    Read more

  • Hamas publicly executes "informers"

    Read more

  • French firebrand leftist to quit party presidency, but not politics

    Read more

  • Fear of Ebola sky-high among Air France workers

    Read more

  • US says Islamic State threat 'beyond anything we've seen'

    Read more

  • Malaysia mourns as remains of MH17 victims arrive home

    Read more

  • Turkish Foreign Minister Davutoglu set to be Erdogan's new PM

    Read more

  • Interactive: Relive the Liberation of Paris in WWII

    Read more

Business

PC sales see worst drop ever as slump deepens

Text by News Wires

Latest update : 2013-04-11

Worldwide sales of personal computers slid 13.9% in the first quarter of 2013, the worst contraction since to International Data Corp began tracking the market in 1994. Sales were down "significantly across all regions" of the world, the group said.

The ailing personal computer market is getting weaker, and it’s starting to look as if it will never fully recover as a new generation of mobile devices reshapes the way people use technology.

The latest evidence of the PC’s infirmity emerged Wednesday with the release of two somber reports showing unprecedented declines in sales of desktop and laptop machines during the first three months of the year.

As if that news wasn’t troubling enough, it appears that a pivotal makeover of Microsoft’s ubiquitous Windows operating system seems to have done more harm than good since the software was released last October.

“This is horrific news for PCs,” said BGC Financial analyst Colin Gillis. “It’s all about mobile computing now. We have definitely reached the tipping point.”

First-quarter shipments of PCs fell 14 percent worldwide from the same time last year, according to International Data Corp. That’s the deepest quarterly drop since the firm started tracking the industry in 1994. Another research firm, Gartner Inc., pegged the first-quarter decline at 11 percent.

The deviation stemmed in part from the firms’ slightly different definitions of PCs.

No matter how things are parsed, the PC market is in the worst shape since IBM Corp. released a desktop machine in 1981. PC sales have now fallen from their year-ago levels in four consecutive quarters, a slide that has been accelerating even amid signs that the overall economy is getting healthier.

PCs are going out of style because they typically cost more than smartphones and tablets, and aren’t as convenient to use. Most PCs sell for $500 to $1,500 while the initial out-of-pocket expense for a smartphone runs as low as $99 while an array of tablets sell for $200 to $300.

Apple’s late CEO Steve Jobs, whose company propelled the mobile computing revolution with the 2007 release of the iPhone, declared that the world was entering a “post-PC era” shortly after the iPad came out three years ago.

In a June 2010 appearance at a technology conference, Jobs likened challenges facing the PC industry to what happened to trucks in the U.S. decades ago as a shift away from farming caused more people to move into cities where they wanted to drive cars instead. “I think PCs are going to be like trucks,” Jobs predicted at the time. “Less people will need them.”

The traditional PC still has a long way to go before it becomes obsolete.

Despite the dismaying start in the first quarter, more than 300 million PCs are still expected to be sold worldwide this year. Tablet computers, a category that was insignificant until the iPad came along, is catching up rapidly: Nearly 200 million of those devices could be sold this year.

Meanwhile, worldwide smartphone sales could surpass 1 billion units this year, Gillis predicted.

PC sales could be undermined even more during the next few years with the release of “wearable computing” devices that connect to the Internet through voice-activated equipment attached to glasses and wristwatches.

The growing reliance on mobile devices is creating new opportunities and tensions throughout the technology industry. Internet companies such as Yahoo Inc. and Facebook Inc. that initially designed their digital services to be primarily consumed on PCs have been scrambling to tweak things so they work better on smartphones and tablets.

But the companies most threatened by the mobile upheaval are those that depend on PCs to make most of their money. This group includes technology heavyweights such as Windows maker Microsoft, PC makers Hewlett-Packard Co. and Dell Inc. and PC chip maker Intel Corp.

“It’s time for these companies to make some critical decisions and ask themselves, ‘How are we going to turn this ship around?”” said technology industry analyst Patrick Moorhead.

Microsoft Corp. CEO Steve Ballmer thought he had come up with a tonic last fall when his company released a radical new version of Windows last fall. Windows 8 has a completely new look that’s similar to the design of the software running the most popular smartphones and tablet computers. The overhaul requires a relearning process, a leap that many consumers and corporate buyers aren’t ready to take.

All signs so far point to Windows 8 being a flop.

“Unfortunately, it seems clear that the Windows 8 launch not only didn’t provide a positive boost to the PC market, but appears to have slowed the market,” IDC Vice President Bob O’Donnell said.

The newest version of Windows is designed to work well with touch-sensitive screens, but the displays add to the cost of a PC. Together, the changes and higher prices “have made PCs a less attractive alternative to dedicated tablets and other competitive devices,” O’Donnell said.

In a statement, Microsoft described the PC market as “evolving and highly dynamic.” Referring to a number that it has previously released, the company said it has sold more than 60 million copies of Windows 8 so far. That is “a strong start by any measure,” Microsoft said. “Along with our partners we continue to bring even more innovation to market across tablets and PCs.”

In its tally, IDC excludes tablets, even if they run PC-style software. It also excludes any device that has a detachable keyboard. With the release of Windows 8, PC makers have been reviving their experiments with tablet-laptop hybrids, some of which have detachable keyboards.

Consumers are likely to have shifted some of their buying away from traditional laptops and toward these new devices, which means that the total sales decline of Windows-based devices might not be quite as drastic as IDC’s numbers suggest.

Windows 8’s poor sales start could amplify periodic calls for Microsoft to replace Ballmer, who replaced company co-founder Bill Gates as CEO nearly 13 years ago. “This puts a lot more pressure on Ballmer because Windows 8 is at the epicenter of all this,” Moorhead said.

Microsoft, which is based in Redmond, Washington, will take questions from industry analysts April 18 when it’s scheduled to release its latest quarterly results. Ballmer usually doesn’t participate in those sessions.

Microsoft shares fell 55 cents, or nearly 2 percent, to $29.73 in extended trading, after the release of the sales reports.

Hewlett-Packard., the world’s largest PC maker, saw a 24 percent drop in shipments in the first quarter compared with the same period a year ago. That was HP’s steepest quarterly decline since the company bought rival PC maker Compaq a decade ago.

HP shares fell 60 cents, or 2.7 percent, to $21.72 in extended trading.

Meanwhile, the industry’s No. 2, China’s Lenovo Group, is benefiting from sales to first-time buyers in China and other developing countries. As a result, it held sales steady, alone among the world’s top 5 PC makers, according to IDC’s figures.

Dell Inc., the third-largest PC maker, suffered an 11 percent decline in the quarter. The bad news could be helpful to the Round Rock, Texas, company’s attempts to sell itself for $24.4 billion to a group that includes CEO Michael Dell. Some shareholders believe the proposed sales price of $13.65 per share is too low, but Dell’s board has argued it’s a generous offer, given the deteriorating conditions in the PC industry – a point that may carry more weight now that the latest sales numbers are out.

Dell’s stock dipped a penny in extended trading to $14.20.

Date created : 2013-04-11

  • TECHNOLOGY

    Photovoltaic film recharges mobile phones with light

    Read more

  • TECHNOLOGY

    Kim Dotcom launches new version of Megaupload

    Read more

  • TECHNOLOGY

    CES tech show provides glimpse of the future

    Read more

COMMENT(S)