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First quarter PC forecast: Windows down 2%, Mac+iPad up 250%

Charles Arthur of The Guardian writes that PC sales “may have passed their peak“.  That’s a powerful, concise statement. It’s backed up by a quote from Gartner’s Mikako Kitagawa:

“This was the third consecutive quarter of mobile PC shipment declines in the US”

IDC even lays part of the blame to something called “media tablets”[1]:

“While it’s tempting to blame [PC] decline completely on the growth of media tablets we believe other factors [...] played equally significant roles.”

But there are several problems with both IDC and Gartner’s analysis of the market. It’s hard to make out causality from their data. There is separation by vendor but not by operating system and there is exclusion of devices hired to do the same jobs as PCs.

For this reason, I need to do my own analysis. I retrieved Gartner’s public statements on the overall market and layered actual Mac and iPad units sold. I also added my estimates for the Q1 2011 quarter just ended to complete the picture.

We can now get an understanding of how the industry behaves with and without various platforms. The chart at the left gives the various growth rates of the market with platforms isolated from each other. I apologize for the shape of the chart but the scale does not permit a concise visual.

Including the iPad, the total PC growth is shown by the blue line. It shows that the market peaked during the recovery but is now slowing considerably.

The green line shows the PC industry excluding both the Mac and the iPad. Although it might include Linux or computers sold without an OS, the label “Windows PC” is a fairly close approximation. It shows that the market excluding Apple entered contraction this quarter and is out of sync with overall economic recovery and growth.

The red line shows the behavior of the Mac franchise. It’s well ahead of the overall market with 2x to 3x the growth. This has been a pattern for over 18 quarters.  I had some thoughts on this in a November 2010 hypothesis.

But the most telling line is the orange line which includes both the Mac and the iPad. In an industry where growth is usually measured in single digits, the iPad business brings growth in three digits.

This near tripling of unit sales is symptomatic of fundamental change that cannot be ignored. Although some analysts contend that the iPad is not causal to the decline in other PC sales, teasing out platforms data seems to show a divergent view.

The bottom line is that Windows-only computer units are down 2.0% while OSX-based computer units are up 272% (this excludes both the iPhone and iPod touch).

Correlation is not causation but tests or surveys where substitution can be proven do exist. For example, a recent survey shows that 77% of users reported that their PC usage decreased after getting a tablet. It also showed that 28% considered their iPad as their primary computer.

So coupling the sales data with the usage data does point an accusatory finger for the decline on the iPad.

In addition, some vendors are being hit harder than others which also hints at where substitution is happening. For example, IDC reports that Acer US unit shipments fell 42% in the first quarter and 16% globally (Gartner’s numbers are less dramatic but in the same direction). Since Acer is known for its netbook computers it’s another telling sign of possible substitution (Acer’s own management has indicated as much.)

So the weight of evidence is beginning to be conclusive: the iPad is the new PC. It should be clear by now that the iPad moves computing into new contexts so it does not yet substitute the PC market but extends it and increases consumption. Substitution is happening in low-end grazing type of usage, a place where the PC was ill-fitting anyway. Incumbent vendors might actually be relieved that the lower margin netbook is finally being supplanted and they can concentrate on the higher end.

Notes:

  1. Analysts like to call the iPad a “media tablet” but the same AdMob survey shows media consumption to be one of its least popular uses.
  • http://twitter.com/rogerdodgerTM @rogerdodgerTM

    I have to mirror this post on my 50" TV.

    • http://twitter.com/Info_Dave @Info_Dave

      You better rotate the screen 90 degrees!

    • mortjac

      In portrait mode I assume ;)

      • http://twitter.com/Info_Dave @Info_Dave

        Yep!

      • http://twitter.com/rogerdodgerTM @rogerdodgerTM

        Yep, probably :)

  • Fritzlan

    I'm reminded of Malcolm Gladwell's book, "The Tipping Point." Could Apple have reached the tipping point last year and we are watching the acceleration into the Post PC world?

    • Stephen Reed

      As I understand the concept, a tipping point is a situation in which a sociological change spreads like a virus.

      I think a more useful model is the Disruptive Innovation, because the iPad had compelling innovations that the market did not expect,

    • mortjac

      Apple is tipping into 1 trillion. Google today says they are tipping into 1 Billion… (in search)

  • famousringo

    Thanks Horace. I was eagerly awaiting your response to those market numbers, and you didn't disappoint in the slightest.

    So at what point will the news that the PC market is shriveling up become more embarrassing than the news that "media tablets" are disrupting the industry? That is, when will these analysts suddenly decide that tablets actually are PCs after all, so don't worry the PC market is fine?

    • asymco

      I can't say how long it will take. We're one year into the iPad and it's still "controversial". Some analysts like Canalys have begun to bundle the two and others are beginning to hint at cause and effect.

      But the real problem is that these market measurement companies are not doing their clients any favors by diverting their attention. The real value in market research should be in foreseeing change not trying to delay its recognition.

      • OpenMind

        If I were client, I would demand refunds and damage compensation. The whole point of hiring a market research firm is to tell me where market will go, not where it was.

      • http://mobiledeviceinsight.com Kevin Taylor

        Yes diversion and delay caused by market research companies is the real problem.

        I also wonder if there is a "buying time" aspect companies want, aimed at the distribution channels to slow them from making any major decisions on partners they support.

      • http://twitter.com/Moeskido @Moeskido

        I've seen similar behavior from Nielsen, in their reports to television networks about ad revenue. One wonders what their internal projections are for how long they can live off the carcass of a market segment while deliberately neglecting to forecast its decay.

      • Steko

        I think the problem is these companies see a revenue opportunity in creating a new category for tablets. That's another report for them to sell or perceived extra value they provide.

    • Hamranhansenhansen

      As soon as there is a "media tablet" running Windows, analysts will consider them to be PC's. Analysts still consider Microsoft to define the PC, even though they made an Apple II clone and evolved it into a Mac clone. So now analysts are waiting for an iPad clone to suit their worldview.

      Monkey-see, monkey-do.

      • CndnRschr

        The problem is that those Windows tablets will still suffer from the incrementalism disease where new features/UI's, etc are Sellotaped onto the same underpinnings. There will be options in the UI to use a stylus and software will depend on mixed metaphors and input methods which will obfuscate the task at hand. iOS is based on OS X for essentially all of its underlying technologies except for its UI. There is no mouse input option. There is no I/O port aside from one USB-based cable (this is part of the problem with the PlayBook in that it needs a traditional Blackberry as a crutch).

        Windows 8 on ARM will be the technical solution to Windows tablets, but Microsoft will not surgically remove the legacy tentacles from Windows in order to force devices to be used as iOS, Android 3 and WebOS tablets are/will be. Microsoft is Windows is Microsoft. The loyalty and dedication is profound. Apple would kick its father in the nuts if that was what it took to move forward.

      • OpenMind

        That is exactly the problem of Microsoft, hold hostage by Windows. Microsoft mobile platform is hostage to Windows, search backend engine is hostage to Windows. Windows was great to Microsoft for so long. It is time to let it go. But as long as Ballmer is CEO, this wouldn't happen.

  • Tom

    Anecdotal evidence here: from march 18 til today, April 15, I reverted back to my iMac/iPhone combination. I jad sold my first generation iPad to help fund its upgrade. During this iPadless interval, my neck and shoulders stiffened again from using the iMac (too high up), and I was faced again with using a physical keyboard to type on. Those who complain about a software keyboard haven’t used one very much. And a 3&1/2 inch display is no match for a 9.7 inch display, retina or not!
    Registration was one step. Set up from restore was one step!
    I’m home.

  • Hap

    From Robert Paul Leitao's "iPad Chronicles" blog:

    "Wonders never cease. My mother is getting an iPad. The dear woman blissfully bypassed the PC era and has never used a personal computer."

    Source: http://www.theipadchronicles.com/2011/04/wonders-

    This sort of what one could call "leapfrogging" makes me think of all those third-world countries where many who never had a landline phone now have mobile phones. Hooray for disruption!

    • Hamranhansenhansen

      I thought the same thing after reading about a woman whose house was totally PC and Internet -free until she got an iPad 3G, activated at Apple Store, and turned on unlimited data with AT&T for $30/month. No dial-up, no DSL, no Wi-Fi, no Ethernet, no CRT, no keyboard, no mouse, no windows, no command-line, no floppies, no optical discs, no IE, no Flash … she skipped all of that. Her entire computing infrastructure is the iPad.

      • Stephen Reed

        Good example.

        I think even households with laptops and PCs may skip one or more upgrade cycles, according to how simple it is to acquire and use an iPad for the limited sorts of activities many consumers perform online.

  • HTG

    The conceit that IDG et al are perpetuating is nothing more than trying to appease their largest benefactors – namely those represented by the green line in the chart – I bet pounds to peanuts that Apple hasn't bought one of their reports since Steve Jobs retook the helm…

    So they dismiss 'media tablet' as a nothing category when the rest of the planet (or increasing parts of the planet) see the iPad as far more than just a piffly media table – they will persist with this conceit until M$FT finally delivers something that is in some way comparable to the iPad.

    And we will laugh and chortle at their foolishness…

    • KenC

      Since Steve Jobs does use industry stats from time-to-time in his keynotes to make his point, I would wager that Apple does indeed buy these ludicrous reports.

      Having said that, it seems obvious that Steve also reads Gruber's Daring Fireball blog, and since Gruber has pointed to Horace's posts, I can't wait for Steve to cite one of Horace's charts in some future keynote. The one above, would be a fantastic candidate for a future Apple keynote. The Giraffe chart.

  • http://Www.johnmclaughlindesign.co.uk John M

    “The real value in market research should be in foreseeing change not trying to delay its recognition.”

    Horace is spot on as usual. I often wonder why companies pay for the nonsense “insights” of the likes of Gartner when they have obviously been paid by Mixrosoft etc… What else could explain last week ridiculous 2015 smartphone prediction?

    We’re now at 1985, post mac introduction, when Dvorak and their ilk were still saying mice would never catch on. In years to come we’ll laugh at these silly predictions as we try to remember when we couldn’t live without our favourite rodent.

    Thanks Horace for being the smartest guy in town.

    • zato

      "The real value in market research should be in foreseeing change not trying to delay its recognition."

      Horace is not easily fooled.

    • addicted

      "I often wonder why companies pay for the nonsense "insights" of the likes of Gartner"

      The answer is rather simple actually. Like hiring consultants, the whole idea of these research reports is to provide a CYA excuse for executives. (Many consultants do a good job, but rarely are consultants' plans implemented unless they agree with what the CEO wanted to do anyways).

      The Acer board, strangely enough, saw through it, but most CEOs, when quizzed by their Board (haha…as if a board will ask the CEO who appointed them tough questions) will point to these reports and say, "Its not my fault. No one saw it coming…"

  • Ian Ollmann

    > I apologize for the shape of the chart but the scale does not permit a concise visual.

    Log plots!

    (Though the linear kind might be better journalism.)

    • poxy

      Unfortunately, log plots fail with zero and negative numbers.

      The problem with this chart is that 20% does not mean the same thing for each curve (since each line represents different numbers of devices and price points.)

      • Ian Ollmann

        The values are only negative because it is in units of % growth :

        units sold now
        ————————- -1
        units sold before

        Notice the artificial -1. If you just plot it as units sold over time then the negative numbers go away, and make direct comparisons for gain vs. loss to see if this is a zero-sum game.

      • poxy

        Sorry I misunderstood. Two words leaves some room for interpretation :-) I was just pointing out the downside to replotting percentage growth chart on a log scale.

        My particular bias would be to not bother with plotting growth, but just plot devices sold or revenue or profit.

    • Hamranhansenhansen

      Yeah, I think log plots are a kind of lying. At least in journalism. The mind does not work that way, and the point here is communication. Success matters. If you want to illustrate a 25 story building and 50 story building we should see a 1:2 relationship to communicate that effectively. The chart here is very valuable as it is.

    • BAH

      I say leave it alone. Log plants smooth things out, but the linear plot here REALLY makes the point

    • http://twitter.com/kawika @kawika

      Horace may have noted that "apology" with more of a wink, considering how well the "giraffe chart" makes his point.

  • Ian Ollmann

    Another thing you can do is show volume moving from vendor to vendor. Part of the reason this chart is so off scale is you've got relative (percentage) improvement vs. very different bases. It is consequently much easier to show 300% improvement if you sold relatively few before and 3% decline if you sold 100x before. If you want to show consumers moving from one platform to another, then the plot might be in units shipped rather than growth rates. With any luck you can show N units less shipped by legacy vendors and 0.9N units more shipped by the high growth vendors.

    • jmmmx

      I think you have a valid point here, if the shape of the chart is your ultimate objective. But the point here is really well made by the graphic – the iPad was disruptive. What you say "…easier to show…" but let's remember that this is iPad + Mac and the Mac, while not a huge share of PCs is not trivial business.

      Again – the chart really, viscerally, shows the disruption. (imho)

      • Ian Ollmann

        I will not dispute that it makes for great journalism.

        However, if you really want to directly prove a relationship, the items in your plot need to be in comparable units, so that the reader can make that judgment for himself. A plot drawn like what you see today could very well be that way and still have the Apple category make no meaningful difference to the trajectory of the PC industry. Apple might have sold 1 ipad two years ago, 2 ipads last year and 5 today. In that case, the downward trend of the PC industry would have to be due to some other effect, because the absolute growth of the Apple segment would have been miniscule compared to the decline in the PC segment. Obviously, Apple didn't sell just 2 ipads, but it is interesting to know whether the transfer from PC to Apple has been inefficient (for every 2 PCs not sold, 1 iPad was sold — people are cutting back) or super-efficient (for every 1 PC not sold, 2 iPads were being sold because now I don't need to share with my wife.) That sort of information can better help us market trends. You just can't get that information from the current unitless display. (units sold / units sold -1 is unitless.)

        Which you use all depends on whether your intent is to make a splash or actually /prove/ a point.

    • asymco

      That's a good idea about showing user transitions, but best would be to use installed base data (which I don't have). The logic here is to show that Apple's "computer" business is booming while Microsoft's Windows business is busting. That is not something you get by reading Gartner or IDC source data.

  • MYY

    Thanks, Horace. Great post! Could you redo this graph by revenues, and maybe profits also? That would be more informative from an investing point of view.

  • Niilolainen

    Brilliant brilliant post.

    Simple, concise and on a matter of extreme importance

    Wow

  • Hamranhansenhansen

    They have the terminology wrong:

    • a notebook is a "portable PC" not a "mobile PC"
    • an iPad is a "mobile PC" not a "media tablet"

    You don't use a notebook while you are mobile, which is standing or walking, you carry it from place to place ("portable") and set it up in the manner of a desk.

    You don't use an iPad for "media," you use it to run full-size PC class native C apps and full-size PC class HTML5 Web apps, same as any other PC. Media apps are just a subset of those apps. It runs the same OS X from the Mac, which is obviously a PC.

    A "UMPC" is a "PC" and an iPad is not?

    • Westechm

      They have the terminology wrong:

      • a notebook is a "portable PC" not a "mobile PC"
      • an iPad is a "mobile PC" not a "media tablet"

      You don't use a notebook while you are mobile, which is standing or walking, you carry it from place to place ("portable") and set it up in the manner of a desk

      I love it! Brilliant!

    • Stephen Reed

      Well no …

      1. The iPad runs the same operating system as the iPod Touch and iPhone iOS – and can run its own applications as well as iPhone applications.

      2. iOS is programmed in Objective-C which is *not* native C – its rather more like Smalltalk messaging with a syntax suggestive of C.

      3. Any PC can run Adobe Flash – iOS cannot because iOS does not use a mouse for hover over effects, instead iOS uses touch gestures.

      Consequently IPad is *not* a mobile PC – its more like a large screen iPhone without voice. Media Tablet is a correct category label for the iPad. Playing games, viewing media, and browsing the web are the most common activities as reported by surveys.

      • Famousringo

        1. So?

        2. You can also compile C and C++ code to run on an iPhone, not that I want to validate your bogus distinction.

        3. It's not a PC if it can't run flash? Seriously? I thought the PC was invented in the 70s, but you're gonna tell me it didn't really exist until Macromedia bought futuresplash in the 90s?

      • Stephen Reed

        1. Top post stated "It [iPad] runs the same OS X from the Mac, which is obviously a PC" – that's wrong.

        2. Top post stated "You don't use an iPad for "media," you use it to run full-size PC class native C apps" – that's wrong. – that's wrong. The vast majority of iPad native apps are written in Objective-C, which is *not* C.

        3. Top post stated iPad is a mobile PC – Its not. We are talking about today – not the past.

      • vinner57

        Over pedantic and completely missing the point.

      • Stephen Reed

        Sorry but the top post point was "an iPad is a "mobile PC" not a "media tablet" which I have refuted using correct definitions and precise facts.

      • http://twitter.com/pipequanta @pipequanta

        As an iOS programmer, I'd just like to provide a rebuttal of your points, Stephen:

        1. The operating system of all iOS devices is using the Darwin kernel and userland (the POSIX environment), the same as desktop OS X. It also uses a large subset (something like 75% or more) of the Cocoa libraries available under desktop OS X, with workalikes provided for the missing 25% (namely, AppKit has been replaced by UIKit).

        So while the iOS may be compiled for ARM processors, it's simply a different build of OS X. This is evidenced by the fact that the iOS Simulator "environment" that iOS programmers use to test their apps is just a thin wrapper of the desktop OS X libraries, rather than an emulation environment.

        2. Objective-C, again, is a thin wrapper on standard C. The only differentiation is that the parser/compiler intercepts and rewraps Objective-C message passing calls with standard C function calls to a little program called the Objective-C Runtime. As a matter of fact, the Objective-C wrapper is so thin that Apple provide explicit instructions for how to "hard-code" messages in static, plain C, for those circumstances where maximum speed is required.

        Couple this with the Objective-C++ bridge, which allows us to program in C++ alongside C and Objective-C, and you can clearly see that Objective-C is just another wrapper that Apple provides for the sake of ease and convenience.

        Of course, using the presence of Objective-C on the iOS platform as an indicator that it's "not a mobile PC" is a complete furphy. You might as well say that OS X (and NeXTStep & OpenStep before it) aren't PC operating systems, simply because most of their applications use the Cocoa frameworks that are written for Objective-C. That's just silly.

        3. I'm a games programmer right now, but I also freelance for companies that do massive enterprise integration apps. I've had the pleasure and privilege of helping write several iOS apps and frameworks to display, edit and create records in ERP and client management systems. I've seen iOS (iPad especially) apps that allow the quick and efficient creation of client records, sales, stock entries and all manner of complex and intricate data. As well as this, they allow the most extraordinarily effective display of the same, in real time, in remote locations.

        This is where the iPad shines: allowing users to do more, not do less. It's been a real thrill to be on the cutting edge of this. I've dealt with client organisations that are ditching all their "mobile PCs" for iPads, because they can do more, more quickly, with an iPad than they can with anything else.

        In conclusion, I believe the grandparent post is demonstrably correct.

      • jmmmx

        Well said! And congratulations on being a leader in this wave.

        Just one little error…
        "ditching all their "mobile PCs" for iPads"
        As has been amply demonstrated above, they have NO "mobile PCs" only portable PCs. tsk! tsk!

        (Let's all be PC here! ) :P

      • http://twitter.com/pipequanta @pipequanta

        You may well be correct. However, I think we're pretty close to an understanding that they're all PCs of some form. :)

      • Stephen Reed

        I concede to your facts.

        Let me abandon my argument about what is a PC and simply conflate PC with personal computer. After being educated, I now agree with the theme of the top post without excess pedantics.

        Furthermore my actual impression of the Horace's refiguring of Gartner and IDC reports was that it illustrates the market shift faced by the hardware and software manufacturers for the consumer x86/Windows platform. I believe that Horace's analysis entails a leveling off or decline of the Microsoft reported sales for Windows 7.

      • http://twitter.com/mjbiren @mjbiren

        This seems to be a first. Kudos for publicly conceding.

      • http://twitter.com/pipequanta @pipequanta

        Thanks, Stephen. I'm glad my experience was able to assist.

        One of the serious problems with market analysis in this space is that the technology is all so complex. I suspect that, despite my efforts to make my points in as close to layman's terms as I could get, a real understanding requires a technology expert. Even more than that, perhaps; an expert in the exact field.

        The problem with that, of course, is that being an expert in one field is no guarantee of the required expertise in the other. I know I'm a know-nothing in the financial field, for example!

      • Stephen Reed

        I've programmed in server side Java for 15 years, and before that Lisp, Smalltalk, C, Cobol, and assembler for a variety of CPU architectures. I've built, configured and administered every desktop, server, and network that I've used since the first IBM PC in 1985. I'm a student of CPU architecture and am closely following the evolution of the ARM platform.

        But I've never programmed for a phone nor for any Apple product, nor ever even owned any any Apple computer. Like you say, expertise in even a closely related field may not matter much.

      • jmmmx

        Stephen – you should try a Mac. While my experience is not as extensive as yours, I do have a degree and 12 years experience in a variety of programming, sqa, tech pub roles, mostly in Unix environments, second in MS-Win.

        I have met a lot of MS-Win programmers who prefer Macs at home, and never a Mac programmer who prefers Win. I sincerely believe it is for good reason.

        Take care – and enjoy whatever system you may use.

      • Stephen Reed

        I have not programmed for Windows in 15 years, all my AI work, e.g. at Cycorp up until 2006 has been on Linux. Macs are expensive for the amount of computing power one purchases, especially when compared to do-it-yourself desktop or server builds. My latest development-server build is a Ubuntu OS, Intel i7 2600K quad core overclocked to 4.4 GHz, 16 GB RAM, 2 TB disk drive – for about $1100 USD.

        However, one needs a Mac to perform iPhone or iPad app development. So it's inevitable that I get one, or that I eventually hire a Mac programmer.

      • Guest

        I appreciate both the accuracy and precision of your post and in full agreement with it, despite understanding only 77.6943% of it.

      • http://twitter.com/pipequanta @pipequanta

        If I can be of any assistance in helping you understand the remaining 22.3057%, I'm at your immediate disposal. :)

      • Childermass

        It is a computer and it is the most personal one I have used.

        I don't remember when the PC became defined by its OS, what language(s) it can be programmed in or what specific programmes it can run.

        Playing games, browsing the Internet and email are the most popular uses, but why should that either confirm or deny whether it is a personal computer? Perhaps more telling from the current survey is that desktop computing use has fallen when there is an iPad available. Not proof but very suggestive.

        This is not just a 'media tablet' – which strikes me both as a sneering put-down and a denial – it is the first truly personal computer. Furthermore there is, to all intents and purposes, no 'tablet' market that is not the iPad. I know some folk wish that the soon-to-be-released wonders from all and sundry were here now, but then if wishes were horses poor men would ride.

      • poke

        "It is a computer and it is the most personal one I have used. "

        Exactly. Perhaps we need a term that reflects that. "Ultrapersonal Computer" or something along those lines.

      • Stephen Reed

        I agree with your point.

        The IBM Personal Computer, commonly known as the IBM PC was introduced in 1981. Microsoft had the right to license MS-DOS to other manufacturers who built IBM compatibles, also generally called PCs. Microsoft and IBM between them spent vast amounts of money educating consumers worldwide about what a "PC" entailed.

        Apple has always distinguished between the generic term "personal computer" which they use to refer to their own products too, and the PC which to this day retains its Microsoft association. Note Apple's PC vs Mac advertising campaign.

      • jmmmx

        The term Personal Computer was in use long before 1981 intro of the "IBM PC" brand.

        In fact – it is only a slight exaggeration to say that Apple invented the PC.

        The difference between PC and Kleenex is that with the latter, people adopted a brand name for a general product. With "PC" (and late Windows) a company usurped a general name to apply to their particular product.

      • Sander van der Wal

        Objective C is a proper superset of C. Mac OS X is programmed in Obj-C too.

        Given that both Mac OS X and iOS use the same OS kernel and the same middleware, and that iOS runs on devices that lag a year or three in computing power compared to desktop PC's, it should be obvious that it is the UI that is the main difference.

        Desktop UI's are optimized for using multiple apps on one or sometimes a couple of big screens. You sit down and type on a real keyboard. As people have been doing since terminals and mainframes. You might do this all day.

        iOS and other mobile UI's are optimized for using one app at the time on a small screen. Touch and tiny keyboards are the input methods. You use the device intermittently, and often while on the move.

        Flash apps being usable only on mouse-enabled devices is a design problem in those apps, when more and more users are not using a mouse. That doesn't say anything of iOS. Flash is implemented on Android, a mobile OS too.

        A desktop PC with a small screen is usable only as a one-app-at-the-time device. Make it portable, like a laptop and it becomes more mobile. A mobile device with an A4-sized screen and added keyboard becomes more like a laptop. A mobile device with a big screen an a keyboard connected start to look much like a desktop.

      • jmmmx

        Ahhh How nice to see the use of terms such as "proper superset"!

        [Note: 1-- while a bit tongue in cheek, I am NOT being sarcastic.]

      • asymco

        To gain insight into the evolution of the category you should define it by the jobs the products are hired to do (rather than arbitrary attributes). Products hired to do the same jobs for users are substitutable.

      • Stephen Reed

        Understood and agreed.

        As one who has been interested in PC shipment statistics for many years, I've always read at least the headlines that reports IDC's estimates. Given the your notion of the personal computer category, I assume that it will never include servers nor embedded computers, but to what extent will it cover mobile devices when preparing backwards comparable statistics? I assume that eventually telco voice service, i.e. SS7, will be completely replaced by VOIP further blurring the distinction as to what is a phone. One can make a "phone call" from almost any internet connected device with speakers and a microphone.

  • Hamranhansenhansen

    No, I think we fundamentally have 2 separate things: phones and PC's.

    Phones fit in the pocket, can be used with one hand, especially while standing, and run mini apps that were developed with a 3-4 inch screen in mind. PC's fit in a carry bag, are used with two hands, especially while seated, and run full-size apps that were developed with a 9-10 inch screen or window in mind.

    We are in a transitional time, so phones also commonly pan and zoom around apps that don't have a phone interface yet, such as most websites, or a remote computing session on a Windows or Mac computer. Also, PC's commonly run mini apps scaled up, like an iPhone app on iPad, or many mini apps essentially combined into one full-size app as a collection of widgets, like the Mac Dashboard. But over time, all apps will eventually have both full-size and mini versions of their interfaces made by the original author. I've been making Web designs with both size interfaces for some time now.

    So I don't think we'll see phones and PC's really compete. Sometimes you may need only one or the other, but the choice will be obvious. Phones will compete with other phones for running mini apps, and PC's will compete with other PC's for running full-size apps.

    • Stephen Reed

      Let me phrase my point another way…

      Suppose one has a laptop running Windows Vista, with 3GB RAM and plenty of disk space remaining. What compelling new software or hardware is going to get that person to upgrade to a new laptop running Windows 7 with 4GB RAM? There just is not really any rapid innovation occurring for native Windows applications aside from hard-core gaming.

      On the other hand, suppose one does not yet have a smartphone. Would that not now be a very compelling purchase? Lots of innovation – a new iPhone model each year. Android trying to get ahead of iPhone and lots of innovation in apps – including gaming.

      This is not to say that I don't agree that the iPad is substituting for Window PC purchases.

    • newtonrj

      "So I don't think we'll see phones and PC's really compete"

      Point – but I do see them complementing each other. -RJ

  • Grant Klassen

    HD said: " Incumbent vendors might actually be relieved that the lower margin netbook is finally being supplanted and they can concentrate on the higher end."

    The problem with incumbent vendors is that the iPad is squeezing them on the bottom end AND they can't compete on the $1K products (Macs have that sewn up too). All that's left is cut-throat $600-$1K range.

  • Hiram

    Plotting growth rates can be deceptive. If you sell 1 android tablet one year, and sell 700 the next, you could plot 700% growth on this chart. This comparing of growth stats is what androiders use to exaggerate their late entry progress.

    • kizedek

      True, which is why one can pretty safely ignore Android tablet stats. (OK, maybe 100,000 sold rather than just 1). But, it's kind of hard to ignore iPad growth when it involves several million. Funny that there has been a studied discounting of the iPad while "Android" growth is touted all over the place. Finally, IDC at least makes some passing reference to disruption due to iPad.

      It would of course be very interesting to see the YOY growth in total units sold by each handset/tablet maker — HTC, LG, Motorola, Samsung, etc. Are they selling more units than they sold a year ago? Or are they merely using Android in place of an OS they previously used? Does "Android growth" actually represent real growth to each and every one of these device companies to the degree that iOS and iPad growth directly benefit Apple? Maybe iOS has raised the bar for expectations of mobile devices, and mobile device manufacturers have to go with it just to keep selling the numbers their shareholders expect them to sell.

      It's true that plotting growth rates alone can be deceptive, but so can anything else taken alone… what good is plotting units sold and saying HTC or Nokia sells hundreds of millions of units to Apple's several million, if revenue, margins and profitability are consistently left out?

      • KenC

        I would wager both are happening. Since the smartphone market is growing rapidly, of course, actual unit sales for HTC, LG, Motorola and Samsung are going to go up, even if they were only holding ground, just like the iPhone has done in the past year.

        And yes, if you look at some of Horace's past charts, you will see that HTC and Samsung did seem to do alot of replacement of other OSes, specifically WinMo.

        The story of Android's rise is not complete without the story of Microsoft's and Nokia's fumbling of the ball.

    • Christian

      "Plotting growth rates can be deceptive. If you sell 1 android tablet one year, and sell 700 the next, you could plot 700% growth on this chart."

      Hmm. Although I get the gist of your argument – shouldn't' that be 70'000%? After all, if you sold 2 tablets in year 2, that would already be 100% growth. Numbers can be deceptive indeed.

      -ch

    • asymco

      You are right which is why I combined Macs with iPads to show the growth in Apple's "computing lines" business (if such a thing existed) in contrast to the combination of all of Microsoft's licensees' computing lines. The Mac did not have a lousy business before the iPad came along.

  • Ginger Rat

    "Plotting growth rates can be deceptive. If you sell 1 android tablet one year, and sell 700 the next, you could plot 700% growth on this chart"

    This would be absolutely true if graphing "iPad only" percent growth. However, note that iPad unit sales were always grouped with existing platform numbers (All PC, Apple only). So calculating that 20 million Macs vs (20 + 20) million Macs and iPads (totally fake numbers purely for demo purposes) results in 100% growth for the "All Apple" category is reasonable.

    My only little niggle is that I would question, Horace, based on your lambasting of some other analyses, whether three significant figures is justifiable.

    • http://noisetech-software.com/Home.html Steven Noyes

      Actualyy, it would be 70,000%.

      • Ginger Rat

        Heh, meant the concept was true, not necessarily the math :)

    • asymco

      Three sig figs is justifiable for Apple's growth because we have four sig figs from Apple on their own sales. Note that for Windows I use only two sig figs which should be fair. The original data was from Gartner and they used about 7 sig figs (which is false but that's all we have.)

      • Ginger Rat

        Thanks for the clarification, Horace. I had been wondering as well about the variable use of sig figs.

  • Ashley

    Horace, I viewed this post on my iPhone at first (in an RSS app), and there, the figure is about the height of 4 screens, and the main text appears below it. It was quite difficult to appreciate like this. When I look at it on my Mac desktop, the text is next to the figure, I can read them together, and this is fine. On the iPhone, I think things would be improved if the legend in the figure could be at the bottom rather than the top, since the detail in the data is at the bottom.

  • http://twitter.com/krahe Jens Krahe

    Please update the Chart with PC+Android and Android standalone (Tablett). Althrough I know it's a really bad comparison, most people think like that.

    • asymco

      I would like to add Android-based computers but I don't have any data on how many were sold in the first quarter. If we use the measure of tablets that were using Google-sanctioned versions of the OS (Honeycomb) the estimates are completely unofficial (100k from an equities analyst). I'm not inclined to believe them.

      There are some estimates for tablets running Google's mobile phone operating system from last year but I don't know if they qualify under this category of computers.

  • mortjac

    I'm telling my readers: Have you seen the graph? I just have to copy it to my blog. All my readers must see it. It's just shocking!

    Very well done Horace. I admire both your numbers, graphs and the way you present them!

    It is funny that the same day, USA Today says, that Apple may reach 1 trillion in market cap http://usat.ly/guOX9k

    This must shake up both the Wall Street and the corporate America.

  • mortjac

    Wish I had ton of dollars to put into $APPL!

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  • Ziad Fazel

    Thank you Horace. It is visually stunning to compare the growth rates of a tablet to desktops/notebooks, resulting in a two-section chart that begs for log scale (as discussed in other comments) were it not for the negative numbers. I recommend if you have time to also plot

    1. Android, QNX, WebOS and Windows Tablets – to better compare the rise and fall of such devices from 2010 for the next few years. That will likely require the removal of the Mac/WIndows data which would barely tickle the axis.

    2. iPod Touch, Zune and maybe Flip – as there seems to be much discussion over the effects these flash-memory, non-phone pocket devices had on each other, and nobody does quantitative comparison like you. The last 5 years there could have interesting lessons for the next 5 years of tablet.

    3. Netbooks – could be considered an enabling or market developing product in the transition from notebook to tablet. Just as iPod with hard drives gave way largely to iPods with flash memory, netbooks seem to have informed both manufacturers and consumers of the viability of much more portable notebooks. Technological advancements in flash memory, batteries and touch screens were paralleled with customer feedback from smartphones on keyboard or not, and the message that customers wanted the move away from the maintenance and operating skill needed for a notebook, towards the simplicity of an iPod Touch. That period of time may only be from 2008 to 2011, but as you can see from the many tablets coming from every netbook maker, RIM skipping/missing it entirely, and the departure of Acer's CEO, a comparison of tablet to netbooks may show an almost direct substitution, especially as netbooks in the field reach the end of their 2-4 year lives.

    Thanks

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  • Paksa

    Luckely the journalists in The Netherlands are pro Apple. They'll go with the tomato.

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  • http://twitter.com/sd435 @sd435

    The trend is obviously very impressive and the growth of Mac + iPad sales is incredible. However since all of the comparisons were done by quarter but year on year it does allow the growth percentages to be much higher than looking at the data in other ways.

    Based on figures that I took from Apple press releases here are the actual sales plotted for the same period: http://sam.davyson.com/files/secure/misc/imgs/app

    All of the comparisons since the iPad launch are comparing to quarters when there were about 3 million Macs (and no iPads) sold each quarter. In reality the really impressive growth was after the first quarter that iPads were released. From Q2 to Q3 2010 these sales doubled. Since then combined sales have been growing well but the percentage increase has never been the same. Because however on this chart you are always comparing to pre-iPad quarters the percentage increases are all literally off the chart.

    To make this point clear – if this chart was continued to Q3 2011 (the first quarter after the big increase) the percentage increase will be much more like 100% – not 200-300%.

    • asymco

      It will be continued as the data comes in. The growth in iPad + Mac will still be an order of magnitude greater than the Windows market for some time to come.

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  • http://jscariati.wordpress.com James

    "The bottom line is that Windows-only computer units are down 2.0% while OSX-based computer units are up 272% (this excludes both the iPhone and iPod touch)."

    I wonder how successful the iPad will have to be for analysts to start counting it as a "computer" (analysts other than Horace, of course!). So far, it seems no matter how successful it is, analysts always add the disclaimer that it isn't "really" a computer, so it doesn't count. Hm…much like how the original Mac was dismissed as not really being a computer since it used a GUI, no? Times change…

  • Abhi Beckert

    I think a big part of why the iPad is growing so fast, is because people often don't share their iPad.

    When the laptop my girlfriend and I share failed with a faulty motherboard, we spent the insurance check on two iPads, instead of one new laptop.

  • http://jscariati.wordpress.com James

    The iPad isn't considered a PC because it doesn't run a desktop operating system (analysts' point of view, not my own). If you look back on the last 10 years of failed Windows tablets, the media still referred to them as "tablet PCs" because they ran desktop Windows. They don't call an iPad a PC – despite it running essentially the same OS core as a Mac – because the UI is different.

    In other words, a PC in a form factor other than a desktop/laptop that has a UI which is actually useful for its form factor is not a PC! Lol.

    • Davel

      You are probably right about this distinction.

      Just goes to show how arbitrary a pseudo journalist can be. I would think mo st of the tech journalists understand what a computer is and what function an OS performs.

      When Microsoft chose to define a browser as part of the functional domain of an OS no one complained either.

    • Paksa

      It is just another step towards a post PC with this new iPad. But that doesn't mean that they ARE a postmodern PC at this moment.

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  • http://www.noisetech-software.com/Perspectives.html Steven Noyes

    I think you need to look at Motorola's Android Atrix for, what I believe, is the future of smart phones. While the execution of the Atrix is flawed the vision of it is amazing. In about 2-3 years, high end smart phones will be powerful enough to perform some really amazing feats. I expect, at this time, that the basic specs will be:

    1) 4 to 8 core A9 class processors running at 1.0 to 1.5 GHz. Built on 30-35 nm tech.
    2) 2-4 GB of RAM.
    3) The ability to drive external displays of 1600X1200 pixels.
    4) 544MP4 -> 544MP8 class graphics.

    I could see 50% of the chip being unavailable when used off of a doc and the rest being powered up when plugged into a doc. The downside of these will be the Virtual Memory subsystems that desktop processors have. The Flash memory phones used is far to slow to act as VM. NOTE: phones use a very slow NAND memory compared to the SSD you can get.

    With these specs, the phones would suffice for all but the true power users. I predict the next 3 years in mobile to be a fun ride.

    • KenC

      I think they are sampling the ARM Cortex A15 (TI fab) this year, which should be the beginning of what you have spec'd above.

    • Stephen Reed

      One of the tech sites I follow, AnandTech, has stated that they are no longer excited about innovation in the x86 CPU area, but rather are enthusiastic about rapid innovation in the mobile, e.g. ARM CPU area.

      I examined the specs of the Atrix closely when they became available. My own one-person startup is developing artificial intelligence starting with a robust parser for English unstructured text. The minimum system so far that I've used has been the Intel Atom CPU running at 1.6 GHz, 32-bit Linux OS, with 2 GB RAM and about 10 GB SSD, i.e. flash, storage. In contrast, most of today's AI-style apps on mobile such as Google's speech translation service use the Cloud to provide the required CPU cycles.

      The key element for running symbolic AI, i.e not machine vision but symbolic reasoning, on mobile is energy efficient CPU cycles and RAM memory. As you state the Altrix is a step in that direction.

      I think that the key lithography generation is *22nm*, about three years away as you say. Otherwise I agree that the ARM architecture should by then support 4 cores and 2-4 GB RAM within the current energy budget. I assume that by then we will also see asymmetrical CPU architectures in which one core is designed for very low energy consumption while idling, and the other cores for relatively high performance when needed but otherwise shutdown.

    • Sander van der Wal

      These devices need power too, and battery improvements are not going as quickly as improvements in silicon.

      Driving an external display of that size would be great, were it not that a usable UI for a small screen is unusable on a big screen, and vice versa. So the device need to switch between different UI's, which means that the apps must be able to manage two very different UI's. Not impossible, but not something that has been done so plenty of changes to get it wrong.

      And it does mean that smartphones will start to compete directly with desktop PC's. If I can buy one device that is pocketable and that has the power to do desktop-level computing with a big screen, a mouse and a keyboard attached to it, why would I buy a desktop PC, or a laptop. I might still buy a tablet because of its portability and its big enough screen, but a desktop PC?

      I would only do that if the software that I need to do desktop PC-kind of work won't be available on that super smartphone. But it would be logical for it to become available.

  • guido

    I don't understand why growth %s are never accompanied by unit volume. Even with Windows PC growth slowing, it's still growing, and while I'm sure it's a "post PC world" and everything Apple does is superb, but have to think that with perhaps hundreds of millions of windows PCs in the marketplace, a paltry growth of say, 10% on a 90+% market share is still a metric shit ton more units sold than 250% of a 10% market share.

    • guido

      Since posting this I do realize Ian (and others) made this point three days ago. But it is misleading if you don't show unit volume and market share. This comment thread may be loaded with confirmation bias but that doesn't make the chart more accurate.

      Clearly Windows growth is slowing (which if you've followed Windows PC shipments for the last two decades, is not uncommon: Windows PC has spikes corresponding to major releases of Windows, Microsoft released Windows 7 perhaps 18 months ago) as PCs go through a fairly predictable refresh cycle.

      Apple is on a roll with their devices, most of which are new in the marketplace, but there is no reason to believe Apple is immune to market saturation. They and their stock will not go up forever. Nothing does.

      By the way, an Xbox + Kinect is a Windows PC, you might want to load that in to the PC numbers as well since we're being all sensationalistic. They had some pretty good growth this last Christmas.

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  • John

    The replacement of laptops with tablets is almost a classic example of a successful attack as described by Richard Foster in "Innovation: The Attacker's Advantage" (1986). The netbook was sort of the last gasp of the traditional PC industry to find a way to push the classic PC design (keyboard, screen, mouse, Windows OS) into a new market (ultraportable).

    From page 37
    "As limits are reached [in established technology], it becomes increasingly expensive to make progress. At the same time, the possibility of new approaches often emerges – possibilities that … depend on skills not well developed in leader companies. As these attacks are launched, they are often unnoticed by the leader, … [who] lulled by the security of strong economic performance for a long time … finds it's too late to respond. The final battle is swift and the leader loses. His attempts to defend his employees and shareholders fail."

    You know the story. When the iPad was first rumored the traditional PC companies downplayed it. Tablets had been done and failed to take off. Even when the iPad first came out there were all sorts of estimates that it would only sell perhaps a million a year. Now that it is a clear success everyone is scrambling to rush to market with some sort of tablet. Clearly this will not be an easy task for them.

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