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Summary:

For nearly 30 years, personal computers as we’ve known them have been the drivers of the technology engine, from Intel to Microsoft to Dell to HP. But the rise of mobile computing is upending the technology business and redefining the PC and how we use it.

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For nearly 30 years, personal computers as we have known them have been the drivers of the technology engine. From Intel to Microsoft to Dell to HP to Micron Technology — many fortunes were made on the back of the PC. But the rise of mobile computing is upending the technology business and is simultaneously redefining what is a personal computer and how we use it.

On Thursday Hewlett-Packard, one of the oldest companies in Silicon Valley with deep connections to the PC ecosystem (they paid $25 billion for Compaq in 2002) and the world’s largest seller of PCs, confirmed it is looking to sell off its personal computing business. It’s also getting out of the hardware game altogether, ditching its tablet and smartphone operations too. But if HP does eventually find a buyer for its PC division, it will only be catching up with IBM, which in 2004 decided that the low-margin PC business wasn’t worth pursuing.

HP is not the only company that is finding itself on the wrong side of PC history. Earlier this week Dell reported its earnings and acknowledged that its bread-and-butter PC business isn’t what it used to be.

But it’s not just those two. Annual growth rates for the PC industry as a whole have been shrinking in recent years, with small single-digit rates of growth. It can’t be inspiring for the manufacturers looking at their balance sheets.

Those companies looking to innovate won’t find much interesting about building PCs anymore either. Laptops will get faster processors, and marginally thinner. HP and Dell, along with the other top PC companies by volume (Acer, Lenovo and Toshiba) build essentially the same computer, with the same software, chips, and hardware. The only thing to scrap over is minor design flourishes and who can price theirs the cheapest–not exactly an inspiring business if you’re interested in being a part of mainstream personal computing advances. Or, for that matter, growth that will boost your stock and keep investors happy.

Meanwhile, the rise of alternatives to traditional PCs, tablets, continues its march on. UBS recently upgraded its already-optimistic tablet forecast for this year, to 60 million tablets from 55 million, and next year, to 90 million units from 80 million. And it’s not just shipments. People are buying them.

We’re not looking at a complete takeover of PCs by tablets. There will still be several hundred million PCs sold worldwide for several years because people will still need PCs for certain tasks. But it’s very clear that many of the habits we associate with personal computers can be carried out with a decent-sized touchscreen and a good internet connection. And better yet, done anywhere, and quickly.

Before all of these signs became unavoidably obvious, the other original PC company was the only one that saw the end of this era coming and actually did something about it: Apple.

Over a year ago, Apple CEO Steve Jobs started heralding the end of the dominance of the PC, dubbing it the post-PC era. He compared PCs to special-use vehicles in June 2010:

“When we were an agrarian nation, all cars were trucks because that’s what you needed on the farms.” Cars became more popular as cities rose, and things like power steering and automatic transmission became popular.

“PCs are going to be like trucks,” Jobs said. “They are still going to be around.” However, he said, only “one out of x people will need them.”

Not coincidentally, this foretelling of “the post-PC era” occurred after the introduction of the original iPad. Jobs saw the device as the future of personal computing, while critics and skeptics saw it as little more than “a big-screen iPod touch.”

Nineteen months later, we see what the iPad has wrought: the iPad is a blockbuster hit (Apple’s sold 9 million this year, and 15 million all of last year), and has sent PC makers much larger than itself scrambling to come up with a response. Meawhile, PC profits remain low, and even the world’s leader in sales  is disinterested in continuing the slog.

So while the era of the primacy of personal computers in their traditional form is fading, they are not disappearing entirely. They’re just taking on a different form.

Thumbnail courtesy of Flickr user Kıvanç Niş. HP laptop image courtesty of by treehead.

  1. If it’s the end of the PC era, it’s also the end of Intel era, and Windows’ future is still uncertain. We’ll see how it goes for Windows 8 into 2013. On ARM they also have to start from scratch, and they’ll be late to the party again.

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    1. Alberto Vigata Thursday, August 18, 2011

      You realize that almost anything non PC out there has ARM in it right? including every single iOS device since the original iPhone…

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      1. I think that he meant Windows on ARM. ARM has been on the cutting edge since Acorn. We’re just catching up.

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  2. Interesting that you mention IBM in your post, Lenovo having just announced very good profits.

    I think the claims that we’re at the end of the PC era are a bit premature. At their heart PCs have always been about cheap flexible components that allow a PC maker to build computers into any form. Far from this being the end of the PC era I think we’re just at the start of an even more diverse PC era. Microsoft is just starting to talk about its new version of Windows that puts touch front and center.
    It is also understood that Windows will work on ARM architecture which should allow devices that match the iPad in size and weight yet offer a full PC experience when plugged into a monitor and keyboard.
    Add into the mix Intel who have been talking about their ultrabook platform and thunderbolt technology that could perhaps allow a tablet pc to be plugged into an external graphics cards enabling desktop like performance and things certainly look like they could become very interesting. In your post you mention Apple having sold 9 million this year which is good especially at the margins they make but it’s not even in the same league as the 175 million copies of Windows 7 sold in the first month that it went on sale. If even a fraction of that number of copies of Windows 8 go onto iPad like tablet machines when it is released next year then I think far from the end of the PC era we’ll be seeing a very different story being written here.

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    1. HP is looking for it’s Lenovo. America is shutting down and being sold off by MBA’s.

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      1. Now why should THAT be a surprise. It has been happening aggressively for the last 60 years. It is about increasing the bottom line each and every quarter so that they can get their bonuses. Now that is true patriotism…to the corporation. Screw the country when the worker bee eventually is not in our system and generating tax dollars. But the pendulum swings back and forth, unfortunately the trip takes a very long time.

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    2. “I think the claims that we’re at the end of the Horse and Cart era are a bit premature. At their heart Horses and Carts have always been about cheap flexible transportation that allow a Horse and Cart seller to provide transportation or any need. Far from this being the end of the Horse and Cart era I think we’re just at the start of an even more diverse Horse and Cart era. Mr. Big Horse and Cart Seller is just starting to talk about its new Horses and Carts that put speed and capacity front and center.”

      “In your post you mention SuperCar having sold 90,000 this year which is good especially at the margins they make but it’s not even in the same league as the 15 million Horses and Carts sold in the first month of this year.”

      =====

      What happened to the horse and cart industry? How long did it take?

      Making comparisons of already established markets to new emerging markets is a fallacy that has been disproved so many times, you really should ow better. No matter how much you believe in the PC market, the fact is it is changing.

      PCs are commodity items, and with profit margins so low, there is no company willing to innovate anymore. IBM, probably the only innovator of late, is gone. Intel is innovating, but only to try to retain customers. The need to constantly upgrade, which was the main computer sales driver years ago, has ended. We no longer need to upgrade to do what we want.

      More people play games on consoles than on PCs today. The console life cycle is, what, 5 years?

      In recent history, people have denied the death of their pet industries:

      Horses and carts usurped by cars and trucks.
      Outdoor toilets replaced by indoor plumbing.
      Steam locomotion usurped by diesel.
      Radio usurped by TV.
      There’s only need for 5 computers in the world.
      Japanese cars will never sell as well as American.
      Home HiFi usurped by transistor radios
      Records usurped by CDs.
      Portable cassette players usurped by MP3 players
      CD sales trumped by digital music downloads.
      TV usurped by YouTube.

      If you look back through history, you will find many “experts” claiming that the new market would not have any real impact for a long time or even ever. They have all been proven wrong. This one will be the same. It was predicted as far back as 1990. Now, it begins.

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      1. Yes your horse and cart nonsense is very interesting but misses the point. I didn’t suggest for a second that the form factor isn’t changing. What I am suggesting is that the iPad has had only moderate success compared to the PC (so demand for PCs is still high) and that if a consumer is given the choice between a tablet pc that can do everything a computer can do AND everything an iPad can do OR just an iPad they may well choose the PC. Of course the jury is still out as to whether MS can make a UI that can bridge the gap between the UI of old Windows with the UI of a good touch based tablet but I think it is Microsoft’s market to lose rather than the forgone conclusion that some people seem to be suggesting.

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  3. Great article — I also blogged about this today as well: “The Upheval of Technology aka Happy Birthday PC!” http://wp.me/p1sDoC-H

    It is exciting but frustrating for the larger designer and developer community to embrace change of this level. New technologies, new workflows, and new platforms are changing so quickly–with company strategies changing at the same time.

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  4. The PC changed the data center of its time[Mainframe based]. The PIPM (Personal Information Processing Machine) will change the data center from now on. If these companies believe they can run without R&D like they did for a long time during the PC era, they will be in for a rude surprise. Software has a low entrance barrier, if consumers [workers] make buying decision once again, HP/Dell will become DEC. Old ERP system thinking will not get you to far, because that will feel and act like JCL (Job Control Language, for the kids). Or these guys in the white coats never get anything done.

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    1. Well said, Ronald. I can count on your to succinctly put everything in context.

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    2. mustapha derras Friday, August 19, 2011

      well zone :-) same players makei sa mes mistakes. The more we will want to distribué lergely a technology the more the innovation effort will increase involving a bigger R&D effort.

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    3. Dell & HP had R&D. It was focused on how to bring down the costs of distribution and manufacture – PCs used to cost thousands of dollars. These companies aren’t stupid and lazy – what they do well isn’t valuable enough anymore to generate high margins.

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  5. garbage spam

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  6. Miko Matsumura Thursday, August 18, 2011

    It’s not the end of PCs. Remember that mainframes are still the backbone of computing and we’re still using relational databases everywhere. It’s the end of PC growth.

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    1. Very well said. It will take years and years before things change on the back end. In this economy, to think a large company will jump ship and uproot it’s backbone is absurd. If anything, laptops get smaller and more applications are run on servers. It will be a fight of who can utilize bandwidth best, not who makes the best hardware. It’s a new era, not the end. I’m excited.

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      1. It’s the end. Over. Give it 10 years and it won’t even be available for the general public.
        Yes, mainframes are still used but as a backbone, like servers, switches, routers, etc.
        Think a little bit about SJ’s analogy. Do you know a lot of consumers who drive trucks? They buy cars.

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    2. Mustapha Derras Friday, August 19, 2011

      Who have imaginer the impacts and the market penetration speed of the iPhone ? Yes PCs will stay for years but things are changing fast !

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    3. Who makes mainframes anymore? Banks don’t use mainframes anymore. Google, Yahoo, Amazon, Apple, eBay, Twitter, Facebook, etc certainly don’t. Aren’t you talking about headless PCs mounted in racks with server software (Linux)? They are still PCs.

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      1. Slavko Glamocanin Saturday, August 20, 2011

        Hey, good idea! Servers are next to change. I foresee ARM or something similar (simple architecture) going for it, low power, low cost, clustered “mainframe”. So instead of a 1KW quad proc server you have 40 low power nodes, clustered.

        I think somebody made this with Intel Atoms, we’ll se how Nvidias kal-el works out.

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  7. I smelled this coming when I saw that HP was not interested enough in prolonging the life cycle of its printers after the un-earth-shaking advent of Windows 7. No one was minding the support forums who had solutions to the incompatibilities in HP’s software. It seemed all intelligent programmers had jumped ship. I resolved never to buy an HP printer again. Let alone a successor to the Quad-core 6600 box I bought from them.

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  8. Paramendra Kumar Bhagat Thursday, August 18, 2011

    The laptop is still PC, and it will stick around, though in lighter forms.

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  9. Yeah. Right. You try writing a 6-page word six on a silly ipad.

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    1. Mustapha Derras Friday, August 19, 2011

      With a keybord extention (just like a laptop with a docking station !) why not ? This is exactly what I’m doing right now why my Motorola Xoom.

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      1. So… you get around the inability to use your device the way you want, by attaching an add on to make it more like the device you don’t want to use in the first place…

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    2. I can “write” a six page document on my blackberry, with just the built-in qwerty keypad… and my kids (age 7,8, and 12) can make me look like a beginner. Just wait til the next generation hits the market and has hardly used a full-sized keyboard in their lifetime.

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      1. Yea, you wait and u c hw your 6 pg art w be written on bb. :-)

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      2. Just wait until the next generation is 40 and their thumbs don’t work anymore. Mr. Bamsen has a very valid point — pads are terrible writing tools if you write more than 140 characters at a time. And once your eyes are old enough to drink legally, you’ll notice how hard it is to stare all day at a screen the size of a hardcover book. So you add a keyboard and monitor so you can get your work done and not blind yourself in the process and voila! You have a desktop computer. The PC model may be evolving, but it’s a long way from dead.

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  10. Making Windows PCs was already just not profitable enough to be worth the risks. Add in a dynamic change to mobile and disruptions like Apple and Android, and HP is right here. It’s just smarter to put your efforts to something more likely to be profitable and let others live on the bark soup and grass salad that’s on the PC table.

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