The state of the PC industry is not looking great. According to analyst firm Gartner, worldwide PC shipments fell 5.7 percent in the third quarter of 2016 to 68.9 million units. That marks the "the eighth consecutive quarter of PC shipment decline, the longest duration of decline in the history of the PC industry," Gartner writes in a press release issued today. The firm cites poor back-to-school sales and lowered demand in emerging markets. But the larger issue, as it has been for quite some time, is more existential than that.
"The PC is not a high priority device for the majority of consumers, so they do not feel the need to upgrade their PCs as often as they used to," writes Gartner analyst Mikako Kitagawa. "Some may never decide to upgrade to a PC again." The threat, of course, comes from smartphones, which have more aggressive upgrade cycles than PCs and have over time grown powerful enough to compete with desktop and laptop computers at performing less intensive tasks. Tablets too have become more capable, with Apple pushing its iPad Pro line as a viable laptop replacement.
Declining PC sales are not news -- I'd blogged about this back in June, and again in July -- but it appears that the trends that we were seeing months ago are continuing to trend, rather than reversing. CPUs just aren't increasing in power at the same rate that they used to, and the widespread adoption of mobile devices (which have less processing power and storage space than a desktop or or laptop rig) has inspired software developers to learn all over again how to write efficient code. Even Oculus has figured out a way to reduce the Rift's required PC specs from $1500 systems to $600 systems.
Added to that, nearly a quarter of Windows users just upgraded their operating systems, something which used to entail buying a new PC; the rest won't need a new OS, or a new PC, for years. Hell, I'm a PC gamer, part of a group that has spent years in a continuous upgrade cycle, and I'm not planning to replace my 3-year-old PC for another 3 years. I'm upgrading the graphics card to something that's Vulkan-ready, but beyond that, I just don't need any more PC; my current rig is still doing everything I need it to just fine, and that doesn't look like it's going to change any time soon.
Previous industry projections didn't show PC sales increasing again until 2018, at the earliest, and even smartphone and tablet sales are levelling off now that everyone owns a phone that's "good enough." Since the projected billions in VR sales aren't going to emerge, either, any more than 3DTV sales did, I expect consumer electronics companies will have a tough time continuing to grow revenue year-over-year, not just this year but for years to come. I'm not expecting 4K TVs to make up their shortfalls, either.
It's probably only matter of time before PC makers start laying off employees to cut costs and convince shareholders of their determination to return to profitability, but their problem isn't inefficiency, or a lack of productivity in their worforce; their problem is market forces which are largely beyond their control. I have a feeling that we're about to see a culling of the weak in consumer electronics and PC manufacture; the question isn't if any of these giants will fall, but how many of them fall, and how long it takes them to do so.