PCs wrap up 2013 with unprecedented 10% downturn

But as the numbers stabilize, there's light at the end of the tunnel, say IDC and Gartner

The PC industry finished 2013 down about 10% compared to the year before, research firms IDC and Gartner said Thursday, but both are optimistic that the death spiral will weaken and that this year would not see double-digit declines.

"There will be enough growth in commercial to help stabilize the overall PC space in 2014," IDC analyst Rajani Singh predicted in an interview. "We believe that 2014 will see a single-digit contraction, more in the 4% to 5% range."

That would be the best news the PC industry has had for 12 months as it saw shipments fall by historic levels in 2013.

Both IDC and Gartner pegged the downturn at 10% for the year, although their estimates for shipped systems -- 315 million and 316 million -- were slightly different.

For the fourth quarter, IDC had the decline at 5.6%, while Gartner said it was 6.9%. IDC's number was somewhat better than an earlier estimate, which Singh attributed to better-than-expected sales to businesses and government agencies as they continued to wrestle with the impending retirement of Windows XP.

"The end of support for XP is helping drive commercial shipments," she said.

With nearly a third of all commercial PCs still running Windows XP -- a number closely matching data from Web metrics company Net Applications -- Singh saw replacements for XP helping PC sales long after Microsoft retires the operating system on April 8.

"Businesses are very conservative, very reluctant to upgrade, so the [migration] momentum is very slow," Singh said. "But even a partial migration [from XP] has the potential to drive strong sales. XP still captures over 32% of the commercial base. That is a huge number."

She was less optimistic about any recovery in consumer PC shipments, where tablets are increasingly filling in for personal computers.

Gartner thought along the same lines, saying that the PC makers will have an especially tough time selling traditional systems to consumers in emerging markets. "Strong growth in tablets continued to negatively impact PC growth in emerging markets," said Gartner analyst Mikako Kitagawa in a statement. "In emerging markets, the first connected device for consumers is most likely a smartphone, and their first computing device is a tablet. As a result, the adoption of PCs in emerging markets will be slower as consumers skip PCs for tablets."

The shipment numbers from IDC and Gartner, while gloomy for 2013, have been expected in Redmond, Wash., headquarters of Microsoft, whose Windows revenue relies predominantly on sales of new PCs. The research firms' rosier forecast for this year -- if negative growth can be rosy -- should be welcome news there, with at least a hint of an end to the decline in sight.

Most analysts, and not just those at IDC and Gartner, expect that the PC industry will continue on a negative turn though at least 2014, maybe also into 2015, then stabilize at around 300 million machines annually. That's a far cry from "Peak PC," identified as 2011, when the industry shipped a record 364 million systems. Few see those glory days returning.

Annual shipments of 300 million would put the PC business on the same footing as in 2008, more than a year before the appearance of Apple's iPad, which kicked off the tectonic shift from personal computers to tablets.

Microsoft will release its fourth quarter earnings figures on Jan. 23, but its new reporting format, changed to reflect the corporate reorganization that started last summer, has made it much harder for analysts to parse Windows' revenue.

PC shipments plummeted 10% in 2013, but the worst of the downturn should be over, IDC and Gartner said Thursday. The year's number was almost the same as that for 2009, the last before Apple launched the iPad and turned the industry upside down. (Data: IDC.)

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

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Copyright © 2014 IDG Communications, Inc.

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