Investment Contrarians

Rest in Peace, PC Market

By for Investment Contrarians |

Rest in Peace, PC MarketThe verdict is in, and it doesn’t look good for the personal computer market. Dell Inc. (NASDAQ/DELL) knows this and so does Hewlett-Packard Company (NYSE/HPQ).

Sales of personal computers (PCs) in the U.S. plummeted by 11% year-over-year in the second quarter, according to International Data Corporation (IDC). The decline was six percent based on research by Gartner, Inc. (NYSE/IT), but this figure was based on sales of PCs and laptops. On a global basis, PC shipments fell 0.1% year-over-year, but the Gartner research indicated it was the seventh straight month of declines or slight increases. Based on my stock analysis, the PC is in deep trouble unless PC makers can re-invent the PC and laptop to challenge the tablet.

You can attribute the fall of the PC to the superlative rise in tablets, according to my stock analysis.

The global market for tablets is estimated to rise to around $31.9 billion this year with over 100 million units delivered, according to Visiongain. By 2016, it’s estimated that about 360 million tablets will be sold, according to IHS iSuppli. By comparison, global PC shipments are estimated at 528 million in 2016, according to IDC. In the U.S., PC sales came in at 71.3 million in 2011, down five percent year-over-year and the first decline since 2001.

Users want tablets, not hybrids or smaller-sized laptops. Hewlett-Packard had been in the tablet market, but left after feeling the death grip of Apple Inc. (NASDAQ/AAPL). Research In Motion Limited (NASDAQ/RIMM), previously viewed as a chief rival, has made numerous miscalculations with the constant delay of new products and a struggle to find itself, according to my stock analysis.

Dell is producing tablets, along with a hybrid ultrabook that can function as a tablet via a flip-around screen. This idea is gimmicky and will pose no challenge to the firm’s competitors.

The PC makers fully understand it will be very difficult to change their course of direction and catch Apple, according to my stock analysis. The same thing happened to Blockbuster after the company failed to adapt to the shift to DVD rentals via mail and ultimately online streaming that then-upstart Netflix, Inc. (NASDAQ/NFLX) recognized in 2002.

Based on my stock analysis, the failure of the PC makers to recognize the industry shift to tablets as an extension of the smartphone was a fatal mistake.

And to make matters worse, the rapid adoption of the tablet will intensify, according to my stock analysis.

While Apple is one of the best stocks at this time, my stock analysis is that there will be challenges to its reign, including Samsung Electronics Co. Ltd. (OTC/SSNLF), which manufactures a stellar smartphone and tablet.

Microsoft Corporation (NASDAQ/MSFT) will also be entering the hardware business via its upcoming “Surface” tablet, which will run on the next version of the “Windows 8” operating system. What’s interesting is that the new platform and associated applications will be able to operate in a wide variety of environments, including PCs, laptops, and tablets., Inc. (NASDAQ/AMZN) is speculated to be on the verge of working on a possible tablet that will offer much more functionality than its “Kindle Fire.”

The bottom line is that tablets are advancing in technology and more powerful applications, which will further erode the demand for PCs and laptops, based on my stock analysis.

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  • Teila K. Day

    You can't do that efficiently y-e-t… But the day is coming. As a photographer I saw that writing on the wall over 3 years ago. Didn't you? Remember when editing video at home wasn't taken seriously? Now any one can purchase enough Avid gear and processing power to easily make their own version of Toy Story in their own home.

    Open your eyes. Stop thinking like Kodak. ;)

  • Brandon J. Andrews

    What these "analyses" fail to take into account is that anyone who knows anything about PC's doesn't buy the garbage from Dell or Hewlett Packard. They either build PC's themselves or buy them from a small business. Where is the estimate of how many millions of people know how to assemble their own computers?

  • Daniel Tekle

    well those people would have played angry birds on their PC at home, but tables do that kind of job more conveniently and efficiently. You don't need a full blown PC to run angry birds.