The PC's Death By A Thousand Cuts: Tablets Today, Thin Clients Tomorrow

old computers

Photo: Leif K-Brooks

Today’s Gartner forecast of PC sales focused primarily on the consumer market, which is already being impacted by media tablets such as the iPad.But there was more bad news for PC makers buried near the end: businesses are showing increasing interest in hosted virtual desktops (HVDs). That means that instead of of buying new PCs every three to seven years to support the latest OS and applications, companies can use inexpensive terminals or stick with old refurbished PCs.

With virtual desktops, the desktop operating system is actually running in a virtual machine on a back-end server. Cheaper hardware isn’t the only benefit for companies: IT departments no longer have to touch thousands of desktops every time they want to deploy an app or patch the OS. But to employees, it looks and feels more or less like using a regular PC.

According to Gartner’s predictions, HVDs won’t start impacting the PC market until 2012 or later. But when this happens, it’s another knife cut to the old PC industry.

Citrix and VMWare are leaders in this space today and stand to gain. Microsoft will probably be OK–a lot of virtual PCs will still use Office, and Microsoft has reluctantly started offering a licensing model that makes it easier for companies to buy Windows this way instead of on new PCs (as 85% of Windows sales are today).

The losers in this switch will be big business PC providers like HP and Dell, whose last quarter was saved by strong business sales. They’ll make it up somewhat in sales of new servers and services, but upgrade cycles for servers tend to be longer and the number of units per sale is typically much lower.

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