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PC sales fall: Should businesses be worried?

PC sales have fallen again in Western Europe, but does this mean that the personal computer is on the way out?

For most consumers and businesspeople growing up with technology, the desktop computer has been integral to their IT experience. The PC, or for Apple users, the Mac, has clearly played a central role in the IT revolution of the last 25 years, serving as the all-important gateway into the world of computing. Within a generation, PCs have transformed the corporate landscape, revamping almost every business process and having a dramatic impact on society as a whole. But times move on, and new technologies continue to emerge. In light of recent innovations, some commentators are starting to question whether the PC is as crucial an asset as in years gone by.

Such suspicions have some basis in quantitative data. A recent study conducted by Gartner reveals a significant fall in the number of PC sales during the first quarter of 2011, continuing the recent trend. Some 14.7 million units were sold in Western Europe between January and March 2011, down by 17.8 per cent on the equivalent quarter a year earlier. The IT analyst attributed the fall to "excess inventory" accumulated at the back end of 2010 - a sign that demand is waning perhaps? What is clear is that there are various alternatives available, leading some people to turn their attentions elsewhere.

In recent years, laptop and notebook sales have chipped away at the desktop computer's market share – serving as a precursor to the more dramatic shifts in purchasing habits now being witnessed. The majority of recent innovation has been focused on mobile technology – this is where pent-up demand is most clearly being displayed. With the mobile internet now a viable reality, many professional people do not want to be tied to a computer in their office. This too is reflected in the statistics - while PC sales fell by almost a fifth during the first quarter, shipments of mobile communications increased by 19 per cent. A mere coincidence, or perhaps the beginning of the end for the humble personal computer?

Smartphones have been growing in popularity for several years, as 3G networks have expanded and more useful applications have become available to users. Businesspeople can now utilise the devices for a variety of professional purposes, using mobile broadband and voice to work more effectively while away from the office. Also thrown into the mix over the last 12 months has been the revolutionary media tablet. Devices such as the iPad and Galaxy have further pushed the PC into the shadows – but does this mean they are really on the way out?

In all likelihood, no. After years of reliable, dedicated service, the benefits of PCs and Macs are widely understood in business – there is nothing for them to prove. The same cannot be said of mobile devices, and companies are eager to test the capability of new solutions. They immediately recognise the potential for greater mobility and flexibility, but are eager to see for themselves just how far mobile technology can go. As such, firms may be allocating a greater share of their budgets to such solutions now, but this may not necessarily be the case in five years when the pros and cons are more widely understood.

PCs still offer a significant number of practical advantages to UK busineses. From an IT buyer's perspective, increased competition and innovation within the PC market has been a great plus point in recent years. And as cloud computing has begun to assert its presence, businesses have been able to pay less for the software they require – reducing total cost of ownership and helping to deliver an improved return on investment. Companies can equip their systems with top-end solutions at a fraction of the cost of years gone by, while strong demand enables tablet vendors to keep the price of their products high.

At present, smartphones and tablets simply cannot compete with PCs in one all-important area – broadband. Ofcom recently published a report comparing the average fixed broadband speeds to those achievable using mobile technology. While the average fixed connection is capable of downloading at 6.2Mbps, USB modems and smartphone devices trail far behind at 1.5Mbps. For businesses, which often need to transfer large files, there is simply no comparison between the quality of service offered. Nor is it possible for professional people to type at the same rate, or with the same accuracy, using a touch-screen or mini-sized keyboard. And where screen size is concerned, browsing is far easier on a laptop of desktop PC than on a handheld mobile device.

PC sales may be falling quarter on quarter, but there is a danger of reading too much into the statistics. While it is clear that tablet and smartphone sales are rising rapidly, this is not necessarily at the expense of the traditional computer. Smartphones for instance can be seen as more of a replacement for mobile phones than PCs, and this is potentially where market share gained. As Gartner principal analyst Meike Escherich explained, the weak economic environment should not be underestimated as a factor in the recent fall in PC sales. Companies are still operating with tight IT budgets, and many are holding back on technology investments across the board.

Generally speaking, PCs do not need replacing year on year. So if cash-strapped businesses can extend the lifecycles of their current hardware without significant detriment to operational performance, they are likely to do so. There is not such a great difference in the quality of individual models as in the early days of the PC, when each release represented a significant advance in terms of functionality and usability. It takes longer for computers to become outmoded than in the 1980s, when regular reinvestment was needed to remain at the cutting edge. This is the situation in the similarly immature tablet market at present, where iPad users got 12 months' use out of their first-generation device before joining the queue for an iPad 2.

The last time the UK PC market witnessed sustained decline was over four consecutive quarters in 2001-02, around the time the bubble burst. Clearly the market has changed significantly over the last decade, and the launch of new devices has had some bearing on IT buyers' decision making. The dramatic shifts in technology and working practices make it difficult to draw clear analogies, but one tends to think there is still a role for the desktop computer, both in the home and in corporate Britain. In an ordinary office setting, employees with a PC or equivalent are still likely to be most productive – there is simply no substitute for a full-size screen and keyboard or super-fast broadband.

In practice, fixed and mobile technologies are complimentary to one another, rather than necessarily competing forces. For companies seeking to ensure maximum productivity and efficiency, there has to be a role for both, depending on the business challenge faced. The next ten years could well see many firms invest in PCs and mobile technology, rather than opt for one or the other. Many people will gain ownership of a PC, smartphone and tablet – using each for individual tasks at their convenience.