What's behind the stall in PC and tablet sales

Windows 8 may help explain the PC's poor uptake, but you can't blame it for the iPad's fall

Inspecting a tablet magnifying glass businessman
Credit: Thinkstock

People aren't buying new PCs so much any more. They're suddenly not buying new tablets, ether -- particularly iPads.

The drop in PC sales is not new; it started with the deadly combination of the Windows 8 debacle and the iPad triumph. But now the conquering iPad is seeing its first-ever decline in annual sales, while Android tablets are moving more into phonelike sizes than full-size tablets. 

Mac sales continue to grow nicely, but nowhere fast enough to make up for the drop in PC sales. That's why Intel announced last week it's cutting its first-quarter 2015 sales forecast for PC chips by $1 billion. That's huge, though it did the same in a 2013 quarter -- Intel's been at the mercy of declining PC demand for a while now.

Tablets "suddenly" lost their energy

In the last four years, the money that would have gone to PCs went instead to tablets, which in 2014 sold as many units as PCs did. Now, the research firms Gartner and IDC say they expect iPad sales to flatten, while Android sales will move to small tablets that are less computing devices and more entertainment and communications devices: phablets without a phone plan.

The drop in tablet sales took market researchers like Gartner and IDC by surprise; both expected a continued climb in tablet sales driven by user reluctance to buy Windows 8 PCs and the portability advantages of tablets. I don't know why they had such optimistic expectations: The slowdown in iPad sales, for example, began in 2013, so it's no sudden phenomenon. 

The research firms don't really know the reasons for tablets' "sudden" stall. But I believe the reasons are largely the same as for PCs.

First, the huge growth rates of the last five years simply were not sustainable. Growth rates will flatten once the market becomes sufficiently saturated.

Second, if you already have a tablet, there's no compelling reason to get a new one. Both Apple and Google have done a great job of having iOS and Android, respectively, work on older hardware, so you need to go back several years before iOS 8 or Android 5 Lollipop makes using an old tablet too painful to bear. (My three-year-old third-gen Pad works fine with iOS 8.)

Slim pickings for renewed tablet growth

Thanks to efforts such as the IBM-Apple partnership to develop enterprise iOS apps and Microsoft's recently excellent Office for iPad suite, both IDC and Gartner expect vigorous enterprise uptake of iPads to reduce its sales slowdown, but not reverse it. (Enterprises are pretty late to the tablet party, as they tend to be with any new technologies.)

The research firms expect Android tablets' slower growth to come from low-margin microtablets more than full-size devices that have the computing oomph of an iPad or Galaxy Tab S. Those microtablets are a lot like netbooks used to be: devices that obscure what's really going on. Half a decade ago, the rise of netbooks masked problems in PC sales, and today the rise of microtablets masks problems in "real" tablet sales.

For more than a year, rumors of an iPad Pro -- with a purported 13-inch, laptop-size screen -- have circulated on the Internet. It's supposedly the answer to declining iPad sales, a device that will satisfy laptop users better. Don't count on it. Samsung's equivalent device last year flamed out.

Apple's new MacBook 12 is aimed at that supposed iPad Pro market, but with the kind of multitasking and application horsepower that tablet critics say an iPad lacks. I simply don't see a bigger iPad changing the game.

Windows 10 won't save the PC -- or tablet

Both Gartner and IDC expect the fall release of Windows 10 to goose PC sales as a usable new OS finally becomes available. It will, but not for long. 

For sure, Windows 10 is what Windows 8 should have been, but it's not adding much in terms of innovation. In that regard, it's like the move from iOS 6 to iOS 7 or iOS 7 to iOS 8, or Android Jelly Bean to KitKat, or KitKat to Lollipop -- welcome but not enough to motivate massive hardware upgrades.

If PC and tablet makers want a huge jump in hardware sales, they need an equivalent of the iPhone 6. Its compelling new hardware excited millions, while the iPad Air 2 did not. Both run iOS 8, which has really nice features like Handoff and better business communications, but it was the iPhone 6 hardware that netted people's dollars.

PC makers have tried hardware innovation to improve sales, especially the two-in-one PC design. It hasn't worked, though IDC and Gartner seem to believe that once Windows 10 is available people will suddenly discover those new designs.

Sure, some will, but I don't think they'll move the needle much. If you're happy with Windows 7, you'll have little reason to get Windows 10. If your PC is ancient and you've been hanging on to avoid Windows 8, you'll get a Windows 10 PC.

IDC is particularly enthusiastic about a Windows renaissance, and it is predicting not only that PC sales will rise again but that Windows 10 will reinvigorate the tablet market, giving Microsoft 19 percent of the tablet market in four years.

With all due respect to my IDC colleagues, dream on. You said the same for all recent versions of Windows and Windows Phone.

First, Microsoft's only real tablet, the Surface RT, was a major flop that Microsoft has quietly discontinued; the other Windows "tablets" are actually laptops with a touchscreen and detachable keyboard.

Second, Windows 10 for smartphones and tablets remains a mystery. The first beta release was lackluster, so for any huge shift in Windows mobile adoption to occur, Microsoft will need to have major magic up its sleeve. That's possible, but I wouldn't take any bets based on what we know right now.

Commodity future or calm before the storm?

The underlying question is whether PCs and now tablets have simply matured to the point where changes will be undramatic or forced, like the move to the USB-C connector by Apple, Google, and I'm sure soon Hewlett-Packard, Lenovo, and Dell. That is, an era of incremental, even if necessary, evolution where people get new models only when they've become too slow or outdated -- like cars, toasters, refrigerators, and washing machines.

The other possibility is that PCs and tablets are in the usual tech cycle of boom and bust -- a flurry of innovation followed by a digestion period. In the early days of any new tech product, we see that cycle occur rapidly, but as products mature that cycle lengthens greatly.

Either way, I don't see 2015 as the year that PCs or tablets come back -- maybe not in 2016 either.

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