The tablet threat to the consumer PC market isn’t some long-term abstract thing that might or might not happen over the next three years.
It’s happening right now.
Take a look at these data points from recent earnings calls:
- HP: consumer PC revenue down 12% from last year in the quarter ended January 31, 2011. In contrast, sales of PCs to businesses were up 11%. (Full earnings coverage here.)
- Dell: consumer revenue down 8% from last year in the last quarter of 2010. The company did fine, though, selling to large enterprises and businesses.
- Microsoft: revenue from sales of Windows on new PCs up 3% from last year in the last quarter of 2010. Microsoft doesn’t break out consumer versus business sales, but said on its earnings call that the business PC refresh cycle — not consumers — is driving growth in Windows. Microsoft also admitted that sales of netbooks — the small cheap computers that were popular in 2008 and 2009 among consumers — were down from last year. (If you’re keeping score, that 3% is an adjusted number; an accounting quirk around the launch of Windows 7 raised revenue artificially at the end of 2009.)
Is the consumer PC market hurting because of macroeconomic trends? Are consumers simply watching their wallets and not buying new technology?
- Apple: sold 7.3 million iPads (which didn’t exist last year) and Mac unit sales were up 23% in the last quarter of 2010.
As Dell explained on its earnings call, part of the consumer PC shortfall was because Windows 7 launched last year, which drove a wave of new PC sales.
But that’s the entire problem: PC makers are dependent on Microsoft’s release schedule for Windows, so they only get this kind of spike every few years.
Businesses upgrade much more slowly. The business PC market will crank along for another year or two, at which point Microsoft will probably be ready to release Windows 8. If history is any guide, that will spike another wave of consumer PC sales.
Except, history probably isn’t a good guide this time.
In the past, Microsoft had very little competition in consumer computing between releases of Windows, apart from the Mac — which is a luxury brand with a higher price point than most PCs.
But every consumer who buys an iPad, Android tablet, or other tablet computer in the next year or two will be much less likely to buy a new Windows PC whenever Windows 8 comes out. The consumer PC cycle is being disrupted right now.
This is why HP is building its own non-Windows tablet.