CEOs Whitman and Dell Bullish On PC Sales Despite IDC Dismal Forecast

"The obituary of the PC has been written 25 times," said Michael Dell, CEO of Dell, in an interview with CRN last month. "The term 'post-PC era' was first coined in 1999 by IBM. At the time, there were about 120 million PCs sold per year. Now there are 450 million PCs sold per year. So the post-PC era has been better for the PC than the pre-post-PC era," he said.

According to IDC, PC shipments are forecast to plummet double digits in 2013, adding the drop is the "most severe" yearly decline ever. The PC market, IDC said, is saturated, with no room for growth both in the domestic and emerging markets. IDC said that there is little hope for PC growth beyond the market for system replacements and even then, IDC said, it anticipates a further 3.8 percent decline for 2014.

IDC said PC shipment numbers will hit rock bottom at just above 300 million per year. The silver lining for OEM partners is that IDC said commercial sales buoyed consumer sales. Consumer PC shipment sales nosedived 15 percent, without taking into account commercial sales. Commercial PC sales (includes desktops and notebooks), on the other hand, dropped a mere 5 percent year-over-year.  

[Related: Dell's Private: Now Comes The Hard Part ]

Sponsored post

IDC credits the "stability" in the commercial market to "PC investment planning, a smaller impact from tablets, and to replacements of Windows XP systems before the end of support planned for 2014." But the PC market, as a whole, just can't compete with a changing mobile world dominated by tablets, IDC reported.

"I don't think tablets are going to overtake PCs in business like they have in consumer," said HP CEO Whitman in an interview with CRN last week after HP posted a 4 percent increase in commercial PC sales for its fourth fiscal quarter ended Oct. 31. "Business people have to do real work. They have got to do spreadsheets. They have got to do PowerPoint presentations. They have got to do things frankly that you need a heftier machine for," she said.

HP posted its first PC unit growth in the quarter since the first quarter of 2012, said Whitman. HP estimated that it gained 1.8 points of share over the prior year and 1.2 points of share sequentially. Sales for Dell's PC business were up 21 percent, according to the company's fiscal third-quarter earnings ending Nov. 18. The mass exodus to the iPad in the commercial space is not taking place and that is saving the PC's bacon, said Rajani Singh, IDC senior research analyst, personal computers. "Consumers adopt new tech such as the iPad much more rapidly than the commercial space. Businesses are conservative," she said.

Singh credits HP and Dell -- which together sell about half of all PCs worldwide -- for lifting the commercial sales market. "Both companies have been doing a lot of alignment with channel partners and that has helped them streamline sales to key markets such as SMB," said Singh.

Douglas Grosfield, CEO of Xylotek Solutions, an Ontario-based solution provider and Lenovo and Dell partner, said his PC sales are growing 5 percent a year. Grosfield said both Dell and Lenovo have increased back-end rebates for PCs and are enticing his customers to buy new hardware versus upgrade old systems with improved licensing deals for office and security software.

Lou Giovanetti, co-owner of CPU Sales & Service, Waltham, Mass., said PC sales have dropped as much as 15 percent for him. "A kinda old PC isn't old enough to replace. PCs have to be ancient before they are replaced," Giovanetti said. "PCs don't need much muscle to meet the demands of today's software and cloud computing services. PCs are living longer." That's an analysis in line with what IDC is seeing.

"Perhaps the chief concern for future PC demand is a lack of reasons to replace an older system," said Jay Chou, senior research analyst, Worldwide Quarterly PC Trackers at IDC. "Despite industry efforts, PC usage has not moved significantly beyond consumption and productivity tasks to differentiate PCs from other devices. As a result, PC lifespans continue to increase, thereby limiting market growth."

Michael Dell told CRN he is cautiously optimistic about future PC sales for his company. "The PC is a challenge. We are assuming that that business will contract. We have very modest assumptions for that business. Dell will be a consolidator and look to gain share. But PC is not our primary objective. Our primary [objectives are to] grow enterprise storage solutions, security, software. Those are things our partners are helping us do."

One of the few bright spots for the PC market are Windows-based 2-in-1 devices that function as a tablet and a notebook, said IDC. Those devices are expected to drive sales for Windows PCs, said Loren Loverde, vice president, Worldwide Quarterly PC Trackers. "These Windows devices are projected to account for 10 percent of a combined PC & Windows Tablet market by 2016, making them an important growth segment for the PC ecosystem," Loverde said.