PC Market To Shrink For Second Year: IDC

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The global PC market will shrink for the second consecutive year, IDC said on Monday. The research firm had previously predicted that PCs would achieve modest growth in 2013, but reversed its forecast due to slowing momentum in emerging markets, limited growth potential in mature segments and consumer indifference to new and expensive hardware.

Don't ring the PC's death knell just yet, though; IDC foresees that the industry will return to positive growth between 2014 and 2017.

In the meantime, the firm's analysts expect PC shipments to decline by 1.3% over the rest of this year, dropping from 2012's 350.4 million, which itself was a 3.7% setback, to 345.8 million. IDC anticipates that desktops will suffer the biggest slowdown with not only a 4.2% downtick this year but also continued, albeit slower, declines through at least 2017. The outlook is somewhat rosier for portable PCs; IDC projects shipments for these products will increase almost 1% in 2013, and that emerging markets will push this segment to 241 million units by 2017, a 19.3% increase from 2012.

Recent PC models have failed to "gain traction" and competition from tablets and other mobile devices has continued to take a toll, Loren Loverde, VP of IDC's Worldwide PC Trackers group, said in a statement.

"Growth in emerging regions has slowed considerably, and we continue to see constrained PC demand as buyers favor other devices for their mobility and convenience features," she stated, noting that though IDC analysts don't see tablets as functional competitors to PCs, devices such as the iPad and Galaxy Tad are nonetheless winning over consumers.

As recently as June, IDC had predicted the PC market would grow steadily if unspectacularly over the next several years. Expansion in emerging Asian markets began to slow over the summer, however. With businesses in mature markets already invested in solutions and consumers either exploring mobile devices or waiting for Windows 8, IDC revised its estimate in August, lowering its 2016 PC projection from 528.5 million units to 483.1 million units. With the newest prognostications, IDC has slashed that expectation to 382 million units, more than 27% below its June prediction.

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Windows 8 has been linked to the PC industry's prospects since the OS was announced, and such commentary has only increased since Microsoft's new offering failed to galvanize holiday PC sales. In an interview, however, IDC analyst Jay Chou cautioned against interpreting this performance as a definitive referendum on Redmond's strategy.

Windows 8 is "certainly part of the story," he said, noting that IDC had originally been "more optimistic about the effects Windows 8 would have on the market." But he stressed that other variables were at play, notably that touch components have not been available in the quantities needed to bring Ultrabook prices down. Chou also stated that there continues to be a demand for PCs in emerging markets but that companies and consumers are delaying purchases; it's not that tablets and smartphones are being bought in lieu of PCs but rather than mobile devices are being prioritized first.

Given that most enterprises in mature markets are currently too invested in Windows 7 to give Windows 8 a serious look, the market is experiencing a perfect storm of unfavorable conditions.

It's possible that Windows Blue, the rumored Windows 8 upgrade, could inject some late-year adrenaline into the market. Chou, though, isn't sold. "I personally don't know what that update will entail, whether or not the Modern UI will be a mandated interface," he said, referring to the OS's divisive, tile-oriented start menu. "If Windows Blue becomes much more user-friendly, at this point it will not have a huge effect on the trajectory of Windows momentum."

Chou said that Microsoft or some other PC player can make progress by offering a compelling ecosystem and user experience. "I think the future really depends on one platform that can integrate what people do on their desktop and offline modes, and that can easily mesh it all in the cloud, where it can be synced back onto other devices," he said, adding, "It's hard to say -- anyone's guess, really -- who the winner will be three of four years from now."