Tablets Will Displace PCs: Picking Winners and Losers

by: Larry Dignan

It’s becoming increasingly difficult to pretend that tablets aren’t hurting PC sales.

Gartner on Monday revised its global PC shipment estimate largely because of tablets. Specifically, Gartner projected 352.4 million PC units in 2010, up 14.3 percent from 2009. The problem: Gartner was expecting growth of 17.9 percent in September.

What happened? The iPad happened. Gartner also projected 2011 PC shipments of 409 million units, up 15.9 percent from 2010. That projection is also down from Gartner’s previous estimate for growth of 18.1 percent.

In a statement, Gartner said:

Over the longer term, media tablets are expected to displace around 10 percent of PC units by 2014.

The PC isn’t dead yet, but smartphones, tablets and mobile computing are becoming more popular. Gartner said that these mobile devices will be more complements to PCs, but will cannibalize some sales.

George Shiffer, an analyst at Gartner, painted the picture.

PCs are still seen as necessities, but the PC industry’s inability to significantly innovate and its overreliance on a business model predicated on driving volume through price declines are finally impacting the industry’s ability to induce new replacement cycles. As the PC market slows, vendors that differentiate themselves through services and technology innovation rather than unit volume and price will dictate the future. Even then, leading vendors will be challenged to keep PCs from losing the device ‘limelight’ to more innovative products that offer better dedicated compute capabilities.

Click to enlargeThat point is notable. The big challenge is predicting winners and losers. A quick initial scorecard:


  • Apple (NASDAQ:AAPL): Early lead with iPad and competition isn’t up to snuff yet.
  • Google (NASDAQ:GOOG): Android will power tablets and give it more of a monetization play in computing devices.
  • Motorola (MOT), Samsung and HTC: These players could become PC replacements and tackle a larger market.

Click to enlargeLosers:

  • Dell (NASDAQ:DELL): The company has some focus on tablets and mobile devices, but lacks a hit and the DNA for design.
  • Hewlett-Packard (NYSE:HPQ): Can the company grow tablets fast enough to offset potential losses in its PC business? Still awaiting the master plan for tablets and HP’s Palm business.
  • Acer: The company will be a tablet player, but it’s hard to ignore that it is tied to the PC business.

On the bubble:

  • Microsoft (NASDAQ:MSFT): A mixed bag here. First, Microsoft lacks an iPad killer and dominant mobile operating system. However, Microsoft does know touch well and could play in tablets. Can the Windows playbook last? In addition, Microsoft is growing its services effort.
  • Click to enlargeResearch in Motion (RIMM): The fate here largely depends on how the PlayBook does.
  • Intel (NASDAQ:INTC): Does it have an answer for tablets yet? If not, Intel is tethered to the PC market as rivals like Qualcomm and Nvidia eye tablets.

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