Consumer PC sales will never regain peak

Personal computer sales peaked in 2011. In that year businesses and consumers bought around 360 million personal computers. IDC puts the number at 352 million. Gartner says it was 365 million. Consumer PC sales were about half the total.

It has been downhill ever since.

At some point PC sales will stabilise. We’re not there yet.

For a while analysts following computer markets struggled to explain what happened. At first they blamed the economy. That was nonsense.

Compared to the economic shock of the global financial crisis in 2007 and 2008, the events of 2011 and 2012 were benign. PC sales grew through the GFC.

Blame Windows 8 for slow consumer PC sales

Some blamed Microsoft’s Windows 8. Earlier releases of new Windows versions boosted PC sales. Computer makers timed new models to coincide with the launch.

Not only did Windows 8 failed to deliver an uptick, it was the start of the slide.

Microsoft can shoulder some responsibility. Windows 8 was awful in many respects. Microsoft stumbled. The apologetic Windows 8.1 only emphasised the scale of Microsoft’s mistake.

Windows 9

It speaks volumes that Microsoft skipped Windows 9. Windows 10 is better. It got Microsoft and Windows back on track. But the underlying problem is not fixed. There was no PC sales boost along with the new operating system, no return to industry growth.

There was no compelling reason to move from Windows 7 to the confusing new Windows 8 operating system.

Betting the farm on an early, rapid and total market switch to expensive touch screen PCs proved as dumb in hindsight as it looked at the time.

Tablets

Windows 8 was Microsoft’s first response to tablets like the iPad. At the time tablets were selling fast and that hurt PC sales.

Microsoft’s second response was the Surface. It’s a better, more measured comeback.

Since Windows 8 launched tablet sales have also fallen. That is another story, but it’s not unrelated. Tablets exposed the PC to realities that were hidden or, at least, hard to see.

Incentives

The problem with tablets is users have fewer reasons to upgrade them. The first wave of iPads still do what they could do six years ago when first introduced. They may be wearing out now and need replacing.

Sure new iPads are better. They are lighter, have better screens, better sound, faster processors. They do more and are nicer to use.

On the whole, when it comes to the things that matter newer models don’t do much more than the first wave of tables. Not enough more to make upgrading essential.

Great hardware

It turns out you can say the same about PCs. The 2016 crop of PC hardware is great. Today’s computers are a huge improvement on, say, 2010 models in almost every department.

Modern laptops are lighter, easier to carry, their batteries last longer. Their screens are more pleasing to look at.

Yet they don’t do anything to make everyday users more productive than their earlier counterparts.

Action elsewhere

That’s because for the best part of a decade now, all the technology action that matters takes place elsewhere. The important new apps are online, most productivity gains are in the cloud. Remote data centers do the heavy lifting.

PCs and tablets are little more than portals into that world. Xero’s small business accounting software is as efficient on a clunky old PC as on a spanking new one. You can use a tablet. Or, for that matter a phone. It’s still efficient.

Citius, altius, fortius

The days of faster, higher, stronger are over.

You still need physical devices to be productive or entertained, but, up to a point, any old device will do.

Or, to put it another way, you won’t get a productivity boost from spending on a new computer or tablet.

Nice to have

What you money will buy is a better experience. Newer devices are nicer to use, they are more comfortable, more pleasing on the eye. That’s not always a spending priority. It comes higher up the hierarchy of needs.

Congratulations if that’s where you are, most computer buyers are not. They are more focused on satisfying basic needs.

Buying software and online services is a better investment than a hardware upgrade.

Where next for consumer PC sales?

PC sales are never going to rebound. It’s easy to talk of a post-PC era, but it’s more than that. Tablet sales won’t rebound either and phone sales have flattened.

The western world is past the saturation point for digital devices. The developing world is not far behind. There are still deprived pockets, but few untapped markets.

This doesn’t mean the end of the line. Sales will stabilise at a point where they meet the replacement demand.

From here on in personal hardware sales are all about replacing retired, worn out or broken devices. The job now is to make better replacements. That means building better cloud portals and better experiences.