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Thursday, March 13, 2014

Final Closure: End of the Wintel Era is Now Undeniable

The last few years have been very instructive for high-tech industry analysts, as we've observed the slow and consistent decline of the Wintel personal computer empire that had symbolized the supreme reign of Microsoft and Intel over this prolific business sector, once upon a time.

But now, as the final chapter of this story comes to an end, the lessons learned will likely become yet one more case study for business school MBA students to review and dissect. Perhaps they'll also wonder -- how could they not have anticipated this transition and take corrective action?

Meanwhile, here's one more chilling quarterly assessment of the same downward spiral. Clearly, dreams of a miraculous Ultrabook-fueled market recovery were without merit. Replacement custodial CEOs with good intentions simply can't erase the strategic mistakes of the past. It is what it is. Enough said.

Update on the Global PC Market Outlook

Worldwide PC shipments fell by -9.8 percent in 2013, slightly better than a projected decline of -10.1 percent, but still the most severe market contraction on record, according to the latest worldwide market study by International Data Corporation (IDC).

Fourth quarter results were slightly better than expected, but the outlook for emerging markets has deteriorated as competition from other devices and economic pressures mount.

In mature regions, the fourth quarter was also slightly ahead of expectations, although the slight improvement seems driven by short-term factors that have zero impact on the greater trend -- such as a slight rise in XP replacements, which is not expected to last long.

Overall growth projections for 2014 were lowered by just over 2 percent, and subsequent years were lowered by less than 1 percent. However, the changes are enough to keep long-term growth just below zero, and push volumes below 300 million throughout the forecast rather than staying slightly above this level.


Emerging regions were on forecast for the fourth quarter -- finishing a dismal year with volume declining by -11.3% percent -- but concerns about the impact of slower economic growth, the culmination of some large projects, and conservative expectations for factors like touch capability, migration off of Windows XP, as well as continued pressure from tablets and smartphones has further depressed expectations going forward.

All hopes of an uplift from emerging markets now seem dashed, as the reality is exposed.

Global Economy Favors Low-Cost Computing Devices

"Emerging markets used to be a core driver of the PC market, as rising penetration among large populations boosted overall growth," said Loren Loverde, vice president at IDC. "At the moment, however, we're seeing emerging regions more affected by a weak economic environment as well as significant shifts in technology buying priorities."

IDC says that they do expect these developing regions to recover in the medium term and perform better than mature regions, but growth is expected to stabilize near zero percent -- rather than driving increasing PC volumes as we saw in the past.

2014 will remain a challenging year for PC vendors in Asia as a cautious economic outlook means consumers will prioritize device purchases -- seeking out the best value for the money.

At the same time, tectonic changes in politics will affect commercial spending in some of the major countries, like India, Indonesia, and Thailand.

The region is also seeing a void in public sector spending this year after huge education deals seen in India and Malaysia last year that are not expected to materialize in 2014. In summary, the overall PC outlook remains bleak. However, the market has moved beyond denial, now that the end of this era is undeniable.