The PC market overview for Q1

In terms of units Windows-based computers made up 78% of all PCs sold in Q1. That was an increase from the 74% in the previous quarter but a decline from 90% a year ago. OS X based computers were about 3.7%, a decline in share both q/q and y/y, something the company attributed to a transition quarter.

The following chart shows the composition of vendor volumes with tablet and traditional form factor computers included:

iOS computers (i.e iPad) were 11% of the market, declining from 13% last quarter but increasing from Q1 ’11’s 4.2% share. Apple reported that the iPad was not at supply/demand balance and thus could have sold more units.

Amazon’s shipments went down significantly though sell-through was perhaps twice sell-in due to inventory build-up during the previous quarter. Overall, about 5 million Amazon Fire tablets were sold since the product’s launch.

The third significant tablet vendor was Samsung, which sold about 1.6 million tablets, down sequentially but up y/y. Other Android tablets may have shipped another 5 million units.

Overall, Apple remained the top vendor with 14.6% share, followed by HP with 14.1% and Lenovo in third at 10.7%. Dell just barely managed to beat Acer with 9% vs. 8.9%.

The impact of the tablet (aka iPad) market is being described in the response to a significant earnings miss by Dell:

Sterne Agee, which admits it probably shouldn’t have upgraded DELL from underperform last week, says it’s notable that the PC maker acknowledged competition from Apple and Google for the first time as part of Tuesday’s dour F1Q report and forecast. Meanwhile, Mizuho calls DELL a “show-me-story for now” in cutting it to neutral and cutting its price target 25% to $15. And ISI snarks “everything is bigger in Texas–including the misses.” It adds while the company “is making the right business-model changes…results will remain ‘chained’ for years (not quarters) to commodity desktops/notebooks, which comprise over half of sales.”

– Dow Jones Newswires (Kevin Kingsbury)

And so, two years later, the impact of the iPad is becoming abundantly clear, even to the incumbents.  The resistance and denial was profound. Even on this blog, the agitation and anxiety when the subject of the iPad as disruptor came up was palpable.

Perhaps that is the greatest testament to the disruptive potential of a product.

  • Again, the right article at the right time 🙂 Any predictions on how the chart will look like a year from now?

  • André J M Villar

    When did toshiba die ?

    • David V.

      They didn’t die, but became too small of a player to get their own dedicated entries. I.e., they’re in “Other Windows” now.

  • JohnDoey

    iPad turns out to be the Windows upgrade that users really wanted.

    • famousringo

      This suggests that Windows 8 is a strategic shift in the right direction. Even if the execution is a little rough and it ends up alienating desktop users, Microsoft is going to lose desktop users anyway if it can’t craft an answer to iOS.

      • Tatil_S

        Now that MS dumped the legacy “desktop” environment for the most part on ARM version of Windows, yes, I think MS is on the right track. I don’t know if bolting Metro onto X86 devices is gonna be useful, but other than loss of some disk space, I don’t think it will hurt users, so no harm no foul. With any luck, MS may allow users to uninstall Metro for those who have limited disk space after switching to solid state hard disks.

        Win8 is very likely to be successful if it is expected to hold the fort for regular X86 based PCs and it is bound to do better on the tablet space compared to what MS has right now. Android tablets are not very successful, so manufacturers will not be reluctant to try Win8 tablets. It is more difficult to prod them into action in the smartphone space, so that is another big advantage.

      • melgross

        Microsoft has announced that Metro is their future, so if anything is dumped, it will be the classic Desktop, as you first said. Metro is here to stay, unless it proves so unpopular that Microsoft shifts focus yet again.

      • Tim F.

        Because they would lose more customers without any response is not an indication that there response is the correct one… or even in the right direction.

      • Exactly.
        What iPad tells us is that there is a demand for iPad-like devices.
        It does NOT tell us that there is no demand for laptop-type devices.

        The future consists of everyone owning
        – a variety of computing devices,
        – all of different sizes,
        – all tailored to OPTIMAL behavior at THAT SIZE
        – all working well together.

        To assume that the future consists of a SINGLE tablet-like device that is supposed to do everything from casual reading in a plane to writing a research paper is to misunderstand 50 years of Moore’s law.

      • Davel

        Moore’s Law has nothing to do with it.

      • JohnDoey

        The first iPad review I read in 2010 was Walt Mossberg. He has been a tech writer for like 25 years and knows his way around a PC. And at the time, he had a high-end Mac laptop as his main PC. He reported in that review that iPad took over 80% of his computer use. That is a techie with a high-end Mac. Many users have much more modest needs (FaceBook, YouTube, Netflix) and much more modest years-old Windows XP desktops with viruses and they have no problem going 100% to iPad.

        I use 2 Macs at work and with scripting, I can keep the CPU’s in both pegged all day long. but since 2010, my iPad is my main computer and it is always with me. The Macs are computers #2 and #3.

        So get over your notebook nostalgia. That time has passed. A computer with a built-in piano keyboard would sell only to a minority of users and that is the same for one with a typewriter keyboard built-in. Just imagine that computers were first invented for music and always had piano keyboards and then one day somebody left the piano keyboard out. Yes, 90% of users would flock to the computer with no piano in it and the 10% who really use the piano would lose their minds. Fact is, piano and typewriter keyboards should always be optional. You should pick the one you like if you need it and use it with your iPad.

      • JohnDoey

        I disagree, because Windows 8 is not iPad-like. It is more iOS-like than previous Windows, but so are the last 2-3 Mac OS versions. Lion did not make iPad users run into Apple Store to trade-in their iPads for Macs and neither will Windows 8 get iPad users back on Intel PC’s. On Intel, Windows 8 is just more of the same.

        On ARM, Microsoft is so far behind, there won’t be any impact for years, if at all. They are due to ship NT-on-ARM (“Windows RT”) well over 5 years after OS X -on-ARM (“iOS”) and there is no strategy that can deal with being that far behind.

        When PowerPC failed to get small and low-power enough for G5 notebooks, it turned out that Apple had Intel Macs running in the labs for 5 years, so within just one year, Mac OS X jumped onto the same Core chips as their competitors were using and the OS X and Windows user bases moved onto Core together and processors stopped being an issue at all. Now, Intel failed to get small and low-power enough for iPads. But Microsoft did not have a secret NT-on-ARM. They could not jump Windows and its 3rd party apps onto a new architecture in only one year. The OS X and Windows user bases are already well into their move to ARM, and only OS X runs on ARM, and only OS X has ARM PC apps. By the end of this year, NT may run on ARM, but that is 2-5 years late and it has NO APPS. And consumers may never understand what it is. Microsoft may never make any ARM PC sales. They may never have an “iPad.”

      • Im betting Widows 8 will be a flop. Its a really odd mishmash of a desktop andtablet OS>

  • The quote out of Dell I found particularly concerning on the part of traditional PC players was their “seeing some IT spending prioritize to purchase other mobile devices”. I like to think of the iPhone as the camel’s nose under the enterprise tent, facilitating the entrance of the iPad into the workplace.

    I think of the jobs for which a computer is hired for the majority of workers and I can easily see a significant proportion of buying skewed towards “alternative mobile devices”, aka iPads, in the near future. Marry that with the BYOD movement and yes… disruption indeed.

  • Tatil_S

    The quotes in that 2011 link are hilarious. Can so many tech commentators be so dumb or are they “incentivized” to say these things?

  • It sure looks like the PC hardware vendors pray hard to catch the Hail Mary pass once Microsoft ships them Windows 8 and they can get a decent chance to compete in the same league with Apple. Would be interesting to watch how they’ll design their product portfolio around ARM vs. Intel chips.

    • And there lies the rub. What will be motivating the entire value network? Will an RT version have higher margins, higher volumes and incentives for vast armies of sales forces and “IT professionals” to embrace and improve? Or will Windows RT be an unwanted stepchild rejected but for the need to do something, anything to protect the core?

      • Joe_Winfield_IL

        Or worse yet, what if it grabs 30-40% of Windows sales? What are developers of legacy x86 applications to do then? I don’t see this as likely, but then why would MS even make the product if they don’t expect it to sell?

      • Microsoft’s historical culture would seem to indicate that it would be viewed as an unwanted stepchild so *god forbid* it cannibalize core Windows sales. I’d imagine the internal debate is raging within Microsoft. Metro is the first, genuine innovation out of Redmond in that space in years yet even now it is still languishing in politics and indecision over its positioning. All the while they continue to be outflanked by Apple and Android in the mobile and tablet space. How Ballmer is not more actively held to account for this failure is beyond comprehension.

      • Ballmer delivers profits. His position is secure. By the time it may no longer be secure it will be too late for his successor. See Nokia.

      • raytraced

        @nuttmedia get’s to the heart of the matter: I don’t think gates would’ve been able to do better either due to those dynamics. I wrote a little something on this based on some DOJ docs that we’re released during the MS antitrust trial:

        TL;dr bill gates was a very frustrated CEO.

      • Davel

        The difference between Gates and Ballmer is that Gates understands technologies. The last serious threat they had to face was Netscape. In one year Gates drove a successful response to that threat to his platform.

        Ballmer does not have the same insight. As Horace says, Ballmer is delivering profits ( with some noticeable weakness in some categories). The board has already scolded him by withholding some bonus money.

      • raytraced

        @davel I’d say that metro is a way more sophisticated response to a competitor than ie was.

      • You are either rewriting or not very knowledgeable about the history of what Gates did and when he did it.

      • People act like Bill gates would somehow be better. Gates completely missed the internet for some time and many other things. He was also the primary guy behind Windows everywhere which is why Microsoft got killed in mobile. Then there is Vista..

      • Alas, his myopic strategic focus only on that which drives those profits and not challenging for genuine new ones will be Microsoft’s downfall.

      • melgross

        I’ve been saying this for what seems to be ages. How well are the sales people going to be trained? That’s going to be a major stumbling block.

        Perhaps we all remember when Asus came out with the first netbooks. They ran Linux. People bought them in large numbers, because they came out during the beginning of the recession, and cheaper computers were important to a portion of the population.

        But they were returned in large numbers as well, because when people got them home, they found they didn’t run the programs they had, and expected them to run. Linux has been designed to be a Windows clone, on the desktop, pretty much anyway, so unsophisticated users can’t always tell the difference from first looks.

        NO ONE explained to these people that Linux was in these machines, and they they wouldn’t run Windows programs. Will things be better now?

        I predict the same problem here. Many people will look at a 10″ windows RT tablet that’s smaller, lighter and cheaper, and select it over the x86 model, thinking it’s the same. The salespeople won’t always know enough to explain the differences. And often, when they do, the buyer won’t understand them.

        It’s really confusing as x86 tablets will run Metro apps. So both will seem the same. I can see the salesperson saying that they both run Metro apps, and the customer not understanding that RT tablets won’t run Desktop apps, as the Desktop will seem to be in RT, even though it really isn’t.

        An addendum:

        When these consumers bring these unwanted RT tablets back to the store, are they then going to buy the bigger, heavier, hotter and more expensive x86 tablets they DIDN’T want in the first place, or will they say; Screw it, give me an iPad!?

      • Davel

        This is the problem Microsoft faces. They are trying to have a consistent brand over different modalities. They want to tie Xbox (living room), mobile and desktop under one umbrella. Can they do it? I think not. I think it is too hard to have the same interface across these platforms. Apple chose a different path. When they wanted to bring multi touch to the pc they did not bring the interface. They enhanced functionality on the touchpad/mouse to enhance the desktop. In other words they kept the two seperate tied together by the Apple brand not the iOS brand.

    • Walt French

      There’s exactly one firm with expertise in tablets that we know to be working with Microsoft: Samsung. They have produced a useful X86 test-bed tablet, and will have no trouble adapting their current ARM devices for WinRT. (I’ve heard rumors that, in fact, Microsoft will allow Sammy to retrofit existing Android tablets for WinRT.)

      I think it’s a pretty fair bet that Metro will run approximately as efficiently as iOS and Android. (I’ll SWAG iOS to do a bit better, Android worse.) I envision that ARM will be used for high-mobility tablets and X86 for legacy-compatibility emphasis. The market will choose.

      I don’t see any reason for Dell, HP or others to prosper in this environment. Microsoft’s challenge will be the ole Job To Be Done one: what usages will WinRT solve better than existing devices do? So far, tablets look like wonderful light-duty PCs and great for interactivity-demanding mobile professionals; Windows Legacy doesn’t do anything for the former (personal) users and will take a while to add value for the latter business users.

      • Bruce

        “Samsung: … They have produced a useful X86 test-bed tablet, and will have no trouble adapting their current ARM devices for WinRT. (I’ve heard rumors that, in fact, Microsoft will allow Sammy to retrofit existing Android tablets for WinRT.)”

        What happens if WinRT ARM laptops get redesigned to run Android 4? They would be cheaper than a WinRT laptop because Android is free to manufacturers and Windows isn’t. There are already a lot of Android apps for customers to choose from, so a manufacturer doesn’t have to worry about the ecosystem.

        If I was a no-name Android tablet manufacturer that wanted to move up, I would look around for a decent reference design for a 10 inch or 11 inch ARM powered Android laptop. When WinRT is introduced, it may make finding such a design easier than it is today. I know Microsoft is using Secure Boot in an attempt to keep a buyer from changing the OS on a WinRT laptop or tablet. But if the change was made (by leaving Secure Boot out of the design) before the device is built, Microsoft couldn’t do much about it.

        Google is in a position to provide such a reference design, but I think they are afraid of disrupting sales of their ChromeOS laptop.

      • Walt French

        There’s now info about MULTIPLE tablet manufacturers working with Microsoft on Win8 devices. I believe all these designs will have hardware locked so that other OS’s will NOT run on them, at least not without some heavy hacking.

        But to your point, the manufacturers don’t really need to re-purpose Windows designs; it’s not hard to design & manufacture an Android tablet. The issue is in profitably selling it.

  • kankerot

    Resistance and denial – what you expect – them to accept it meekly? Perhaps a better response would have been acceptance and response. I suppose Dell etc mught as well pack their bags and leave the industry – thats great for the consumer.
    Howevever a clearer picture will form after the release of W8.

    • I expect them to accept it and aggressively shift into new businesses or nurture internal disruptive opportunities. This should be everyone’s expectation.

      • simon

        I think HP’s spectacular failure with WebOS and Playbook’s struggle has scared away most from taking the aggressive route. As another person put it, the OEMs are praying Microsoft can work their magic to somehow bring glamour back to the commoditized hardware market.

      • WebOS was elegant, attractive technology. It’s mishandling serves as an emphasis of the mostly-unheralded attribute behind Apple’s success: EXECUTION

      • Tatil_S

        Did HP even try, after going through the purchase of Palm? They discarded the whole thing in less than a year if my memory is accurate. They may have dumped the CEO that initiated the acquisition, but if it was a good idea (and I think it was), the board should have hired somebody who would see it through.

      • melgross

        WebOS was dead before HP bought the company. You can’t revive a dead horse. It was a mistake in the first place, and they paid too much for it. Rubinstein simply wasn’t the person to be leading the company.

      • Davel

        I agree as I illustrate above.

      • Some have argued that public companies with professional managers entrusted with fiduciary responsibility are inherently incapable of solving the innovator’s dilemma and are thus doomed to be disrupted. I’m starting to believe the argument. Whenever you as a manager try to work out the solution to the dilemma, you encounter a value destroying obstacle that cannot be surmounted while maintaining your position in the company. Your successor won’t make the same mistake and the whole enterprise collapses.

      • kankerot

        This dilemma has been well researched in economics. it’s referred to as the principal / agent problem. Owners ie the principals entrust the agent to effectively run the organisation. However the agents motivations could be allied to a remunaeration scheme that rewards profit maximisation / share price – so automatically they are in a position to reward sustaining rather than disruptive technologies.
        The real issue is the incentives and discincentives of employees.

      • ste

        “value destroying”: You can watch that at Nokia under Elop. He gets a lot of hostility and long diatribes for destroying so much value (eg Symbian).
        I think it is the difference how this value is judged: By historic and current value (eg revenues still good) or by a future fast dwindling value.

      • Of course, not all value destroying is to be tolerated. The ability to tell what should be destroyed and what shouldn’t is rare and the decision making processes in large companies don’t usually include room for this sort of debate.

      • ste

        “value destroying”: You can watch that at Nokia under Elop. He gets a lot of hostility and long diatribes for destroying so much value (eg Symbian).
        I think it is the difference how this value is judged: By historic and current value (eg revenues still good) or by a future fast dwindling value.

      • I suspect that the problem is even deeper, that it is ultimately theological.
        What we have here is commodity capitalism — the non-Apple players are selling something that is ultimately identical, and in such a situation all they can do is compete on price and market segmentation.

        The theological part is the belief persists that this is the optimal way to run the industry. What has happened in other such situations is that someone steps up (yes, even in the good old capitalist USA) to maintain a price floor — Texas Railroad Commission for oil (until that job got outsourced to OPEC), various boards for agricultural commodities. We (obviously) haven’t seen this in the PC space.

        The theological belief is not completely wrong, of course. Desperation has meant a tremendous amount of innovation in attempts to make a PC cheaper than the other guy. But the underlying assumption is problematic. If people who support it were pushed, they’d probably say something like “competition leads to a variety of different PCs, each of which incorporate specific innovations”. There was a time when something like this was true, but
        (a) the PC companies are too poor to innovate seriously these days. They can’t even innovate at the manufacturing level to compete with Apple.
        (b) thirty years of experience have taught most of us that “innovation” in PCs is synonymous with “incompatible”. It’s really hard to add something useful to the complexity that is a PC in such a way that it works well. The best you can usually do is have a single app that takes advantage of the fancy new feature — all your other apps don’t get to use it.

        Relevance to Android? Well — is there value in Sense, TouchWiz and the rest of them? The real question is
        – can you add sufficient value to a device that you can charge a whole lot more for it while SIMULTANEOUSLY
        – retaining compatibility with the eco-system that makes the device valuable in the first place?
        I’ve seen no evidence that Google (and Samsung, HTC et al) have a better answer here than MS (and HP, Acer at al) have in the PC space, Heck — they can’t even see there is a problem because of theology — they cannot conceive of a world where competition is problematic, where a hegemon setting price floors and controlling the direction of development might be valuable to everyone.

        And so we get Apple with 73% of profit, Samsung with 26%, HTC with 1% — commodity capitalism and the race to the bottom; or the PC story only playing out over five years rather than the 20 years or so it took for PCs.

      • Davel

        The problem with innovation in the pc space (as you touched on) is if you innovate everyone has to use it and so your work is given away. This means you do not profit from your work so there is no incentive to innovate. What happens is everyone uses one or more of an off the shelf product ( USB ports, sd cards, wireless keyboard ) and calls it innovation. Some create detachable products but with no vision other than look how cool it is? You can take it apart and put it together! They put it out there and leave it to the consumer to discover its value or not.

      • Arek Dreyer

        The thoughts in this comment deserve to not be buried in the comments.

      • “Some have argued that public companies with professional managers entrusted with fiduciary responsibility are inherently incapable of solving the innovator’s dilemma and are thus doomed to be disrupted.”

        IBM management would beg to differ with that statement. IBM has faced every disruptive technology created and has figured out how to take it head-on or pivot. IBM may be more instructive than Apple since it has had many professional managers over its lifetime – with some being more successful than others.

      • IBM managed to survive disruption, as did Apple. Both changed, IBM perhaps more. They are the exceptions however.

      • Davel

        The problem with WebOS was management. One CEO brought the technology in house. He was ousted. The next guy did not share the vision so he killed WebOS. This is evidenced by waiting 2 weeks till its unveiling and then killing the whole department. He didn’t have the guts to kill it when he came in. He had to let the ‘market decide’ before affirming his opinion.

      • kankerot

        Look at these companies – they are the archetypical company created by management consultants. They are efficient at producing hardware and services that don’t actually meet the needs of their customers – the segment the market and make products for these segments. the fact that their competitors do the same only highlights further their predicament.
        They cannot break the mould as that means what they are doing is wrong. Subsequently they cannot take the big bets or cannibalisation that it requires. Senrio management role becomes one of managing and running than actually thinking about why they even exist. It’s why financial and accountant types gravitate to the top – they become the best at maintaining the status quo when in fact what these companies require is someone to disturb the whole organisation.

      • Davel

        You guys miss the point that the incumbents can’t do anything. Windows 8 is the first platform that allows them to respond. They tried Android 2.1 on a tablet and it didn’t work. Nothing compares to the iPad because there is no infrastructure.

        Microsoft promises to bring the .net world to tablets. In this way the Dells and Samsungs, et al can respond. Dell, HP, etc can only slap an OS on hardware. This is why Palm was so intriguing for HP. Unfortunately their clueless paint by numbers CEO wanted to turn the company into a services company and killed WebOS rather than enhance and extend it.

  • Mike Wren

    “Amazon’s shipments went down significantly though
    sell-through was perhaps twice sell-in due to inventory build-up during the
    previous quarter. Overall, about 5 million Amazon Fire tablets were sold since the
    product’s launch.”

    Why have Fire sales gone down? Was it just a Christmas gift item? Or has there been bad word of mouth? It has a four star review on Amazon, the same
    as an iPad 2. The new iPad has 4.5

    It seems like the Fire would be doing better since it has
    content – books, videos and magazines.
    The only other significant content ecosystem is from Apple. And the Fire is cheap (in more ways than one). But Android has a dearth of dedicated tablet
    apps. It’s just smartphone apps blown up
    to fit on a larger screen.

    • Tatil_S

      Price and value are different animals. Fire may be cheap and it may be well worth $200, so it would be hard to find faults in the reviews, (hey, what do you expect, it is only $200) but overall it may not attractive enough for most consumers.

    • The Fire is hired as a gift item and thus very seasonal (though not distributed in China and hence not in Q1).

      • blerky

        The Fire has a fairly poor user experience if you are used to an iPad. It’s jerky and, as with so much Android-world software, stuff is just thrown at you on the screen.

      • That may be but how is it as a gifting experience (i.e. for the buyer and hence gift giver?)

  • I’m sure it would be hard to pull the data together, but a profit share graph of the data above (as you’ve done for smartphones) would be very interesting. Apple would be a much bigger player than in marketshare.

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  • graphex

    Everyone’s definition of a PC is different. For me, I have a personal computer in my pocket and one of its productivity programs allows me to make phone calls. For me, my iPhone is a personal computer.

    • Yeah — I was on an airplane once, on the tarmac, and the crew told us we could use our phones, but please don’t take out our personal computers. For a brief moment, I stared at my iPhone, flummoxed.

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  • vladiim

    What prediction would the data lead you to make?

    • The data is only an affirmation of a prediction made long before the data was recorded: that the PC industry is being disrupted by mobile computing and that mobility itself is a shift in the basis of competition that incumbent vendors (both computing and telecom) are unable to embrace, preferring to shy away.

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  • Kroof

    Do “phablets”, phone/tablet “hybrids”, such as the Galaxy Note (claiming 5 million sold) fit into your analysis?

    • The distinction is now based on whether a computer has cellular operator distribution as its primary channel to the market. As long as the product is sold primarily by operators (and thus designed to be used with a monthly voice plan) I classify it as a phone.

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  • Horace, if you can’t give numbers for Toshiba and Asus for all quarters you should’ve moved them into the number for “other”. I know that the reason for your graph to look like this is because Gartner only gives accurate numbers for the top 5 vendors (and for the current top 5 in the same quarter a year ago) but the way your graph looks now the reader gets the impression that Toshiba didn’t sell any PCs in Q1/2012 and Asus didn’t sell any PCs in Q1/2011 and before Q3/2010 which clearly isn’t the case.

    You should correct that.

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