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Waiting for Godot

Gartner has published preliminary PC unit sales for Q2. The data from Apple’s Mac sales has not been published yet but based on some estimates, we can draw a partial picture of the personal computer market.

 

My estimate is that the Windows PC market fell by 1% while the Mac market grew by 15%. Gartner reports an overall flat market. I’ll leave out the iPad for the time being, and show the growth of the Mac vs. Windows:

 

In terms of individual vendors vs. each other, the patterns are as follows:

It’s perhaps a bit early to tell, but if the Windows PC market continues to slow or contract, it may be possible that HP and Dell will cede their market share leadership positions to Lenovo and Acer. Already “Others” account for as many units as HP and Dell put together.

If we are to believe the analyst community reflects consensus, the industry, in the aggregate, continues to treat the potential for disruption from devices as unlikely. There always seems to be a wrinkle, a quirk, or an exceptional circumstance that is to blame. I won’t get into all the excuses given by analysts for the slowing of PC sales but will point out that there’s been a series of initiatives put forward by the industry to act as “catalysts” for growth. So far they have not worked. The current expectation is that Windows 8 will reverse this trend.

Perhaps. But perhaps the relief, if it comes at all, will be temporary.

[UPDATE: Due to a data error, the drop in Windows was overstated in the initial version of this post as 10%. It’s been corrected to a drop of 1%]

  • benbajarin

    Thanks Horace for the breakdown. I know our analyst firm is of the minority in our perspective that tablets are PCs and the future of personal computing at large. Of course it is harder for the larger firms to get their brains around this and there are individual analysts who feel the same but as you know many reports are done in community by a gaggle of analysts.

    I think realistically we need to be using the data to demonstrate that PCs are actually on an upward growth trend by including tablets and specifically the iPad. As I have told my colleagues at IDC and Gartner that if they want to break out media tabs separately they should do so with the 7″ form factor.

    Our role as industry analysts is to provide valuable information to our industry clients. And we are doing them a disservice if we are not truly showing them the next big growth category which is tablets and helping them break free of a clamshell only priority.

    The fact of the matter is hardware only companies will have a hard go at this market going forward. Win 8 may be a catalyst for them and it may not. What happens if it is a bust? Things may very well get interesting going forward but the point remains that it needs to be clear tablets are a critical part of the personal computing ecosystem and we need to be clearly showing their growth trend amongst traditional PCs if we are to be accurate in reflecting what is happening in the market.

    • Walt French

      Hi, Ben. I’d appreciate your thoughts as to why your friends at other firms have a problem seeing “tablets are PCs and the future of personal computing.”

      Yes, I know Cook said as much, in as many words, at ATD. Still, there must be some mindset — perhaps that corporate cubicle jobs would be very ill-served by equating the two. Or, ???

      • benbajarin

        Like all things there is politics involved. There are those individuals at those firms who do believe they should be counted but their voice does not always win. There is also the “that’s the way we have always done it” mindset as well.

        It is also very disruptive data and they want to sell these reports. To which my point is that it is disingenuous to not count them because to not do so would not be accurately reflecting what is happening in the market. We do the market and the industry a disservice to not help them understand where their priorities should be in terms of roadmap planning. To focus only on notebooks, and subsequently compete with half a dozen vendors for less than 10% annual growth optimistically is a move to extinction.

        I’m more interested in accurately reflecting the market data and subsequently showing how different form factors are segmenting around personal computing. Our analysis and data is focused there rather than what is being done by the larger firms at the moment.

        For them though it is only a matter of time before they embrace what we are preaching :)

      • FalKirk

        I thought John Gruber of Daring Fireball answered your question beautifully with this single sentence:

        “Classic disruption: the old guard doesn’t even acknowledge the upstart.”

        Source: All PC makers sales drop dramatically, except Apple, Daring Fireball, Jul 12, 2012

      • Walt French

        Yes, I liked that Gruber quote (which seemed unremarkably consistent with Horace’s Message when I read it).

        But no, taking that as the answer to my question is to say that these profit-oriented consultants think they will succeed by helping their customers go out of business. I’m not especially enamored of the level of insights they offer, but I wanted Ben’s more specific take on what motivates an orientation that seems unhelpful.

        I was guessing that the customers of these reports are building PCs (maybe?); they are not (by count, anyway) Google and Microsoft, who will need to build the software platform that the hardware guys can hitch onto. For them, you might as well be talking about a sudden surge of interest in expensive chronograph watches—they might like to get in the biz, but it’s quite out of their league.

        You and I are interested in the shape of overall computing, including today’s disruptive devices as well as possible future ones; maybe especially Apple. These reports don’t tell us much of anything. But depending on the reader, they could be less awful than they look to us.

      • JohnDoey

        iPad is a mobile PC in the same way that MacBook Pro is a notebook PC and iMac is a desktop PC. Totally basic. Any BS you try to play around that is not going to last over the next few years. When Keynote went from Mac to iPad it remained a PC app — it just moved from notebook to mobile.

    • http://www.asymco.com Horace Dediu

      Some analysts have chosen to include tablets and some companies (e.g. HP) openly talk about the threat/opportunity of tablets. It seems to me that the sensible approach is to post all the data and explain it. It’s a simple matter to create a report which shows PCs, PCs with tablets and tablets only as three possible points of view. Which view should be considered depends on what you are trying to decide.

  • graphex

    1 – Great Title! (though Godot should show up when Surface-like PC’s ship from Wintel OEM’s.)
    2 – in last graph, no plot for Mac+iPad combined?

    • Ian Ollmann

      > (though Godot should show up when Surface-like PC’s ship
      > from Wintel OEM’s.)

      Much depends on whether Godot is supposed to be Win8 or “growth”. We can have every confidence that Win8 will ship. What happens after that is less clear.

  • AC

    it was about a year ago that i noticed my wife leaves her bag and lenovo laptop in the car overnight and uses her iphone 95% of the time at home. the other times she’s on the MBP i bought her as a gift or the ipad.

    even if i didn’t buy an MBP there would be no need to buy a new laptop for home until the old one breaks. it’s only used to store photos, music and other media. most everyday use is on iphone or ipad

    • aaarrrgggh

      It will be interesting when more people move to the consumer single-drive NAS units for this function. All that is missing now is an easy way to back them up with improved reliability (mirroring).

      • KirkBurgess

        I think the concept of home NAS units may have already been superseded by cloud services.

  • Canucker

    The creative excuses for the declines suggest a general unwillingness to concede that the entire Windows PC market is stagnant. Moreover, if Windows 8 is the returning Messiah, then what is the likelihood that Gartner, IDC etc. will lump all Windows 8/RT devices together? It’s the ostrich syndrome and is as applicable in telecom as it is in PCs.

  • FalKirk

    We’re seeing a monumental changing of the guard happening right before our eyes.

    1) Desktop and notebook sales are stagnant or falling;

    2) Phones are the largest personal computing device, by far, and their rapid growth is far from done; and

    3) Tablets are growing at an even faster pace than phones and they may well be even more disruptive that phones.

    A) Windows exists almost solely on Desktops and Notebooks. Their phone efforts have been moribund. All their hopes of breaking into tablets lie with Windows RT and Windows 8.

    B) Android exists almost solely on phones. They’re desktop efforts are non-existant and their tablet efforts are nascent.

    C) Apple is the only company that is providing a viable solution for phones (iOS), tablets (iOS) and notebook/desktops (OS X). They may or may not succeed in the coming tablet gold rush but they are, without any doubt, best positioned in all three categories of personal computing.

    • Klasse

      Nice post, very clear and concise. I agree, but couldn’t have articulated it this well myself.

      • FalKirk

        Thank you for your kind words. Much appreciated.

    • http://twitter.com/michaelrbock Michael Bock

      Agreed Except with point B. Look at the last graph. Even without the Fire, Andriod is shipping more tablets than Apple is shipping Macs.

      • twilightmoon

        Are we talking about shipped units, or ones sold to end users? Are there really more Android tablets in use sold in the past 12 months than Macs sold in the past 12 months?

      • JohnDoey

        So what? Compare the actual Android-based devices against their Apple competitors and you see Apple has the best-selling devices.

  • http://twitter.com/DaQuantumFro DaMarico Fowler

    Apple is the Future

    • Gonji

      As an avid Apple user, I hope variety is the future.

      • Space Gorilla

        I like variety and competition as well, but the general view in the tech industry seems to be that Apple’s approach is wrong. Microsoft recently said exactly that. Microsoft and others are ignoring reality. Apple’s approach re: making it simpler, removing complexity, is exactly what consumers want. As much as the geek crowd would like, consumers just don’t care about open and they aren’t clamoring for a tablet/PC combination.

      • tobiatesan

        Yep.

        They never learn.

        Meanwhile, Apple is making billions of dollars while they figure out *why*.

        I suspect there is one company who is starting to get Apple’s lesson, and that is Canonical.

        Ubuntu has a looooong way to go, but they seem to have some kind of vision regarding UX that’s more than just “let’s rip the Mac OS GUI off and paint it orange”.

  • Walt French

    I’m surprised that although these two analytical firms mentioned consumers’ dollars going elsewhere than PCs, they didn’t break out units bought by/for businesses versus homes and/or entrepreneurial shops.

    The Enterprise market is stagnant because new business processes work fine on Win7 and last year’s PCs. No new functionality is needed for us cubicle-dwellers, so innovation in the space is dead.

    I’ve previously commented how astonishing it is that the iPhone took off during such a severe recession. And once you roll in your iPad numbers, and when you look at the identical disruption/explosion in the cellphone space, it’s as strong as ever: the consumer is finding exciting new uses, can afford and can “administer” machines to do things they couldn’t before.

    Replacement cycles on existing desktops will continue to stretch out; new adoption and upgrading will continue to fuel innovation in the consumer space. Really, it seems the only question mark is the extent to which businesses will like Surface versus iPads for the sorts of high-mobility functions that Needham cited in their iPad estimate revision today.

    • aaarrrgggh

      Enterprise is much more than just Cubicle Dwellers though. That is the opportunity.

    • http://twitter.com/MoreCran CranApple

      Another interesting thing about the extended refresh from a consumer perspective, I definitely update my PC less often now that the family has smartphones and iPads. Given that many still have the need for the ‘truck’, when it is time to buy they want it to last and are willing to spend more money on a ‘finer’ PC, this path leads straight to the Mac.

      • tobiatesan

        Exactly.
        Unless you are a gamer or you do video encoding, audio tracking or some sort of heavy scientific calculation on your desktop (I regard this as unlikely, the good men in oil&gas and medical research buy dedicated badass machines from Cray and SGI exactly for that), I don’t think you’ll need more processing power than is afforded by, say, a 2006 Core Duo for at least the next few years.
        You can do your web related stuff, you can play HD Youtube videos, you can play blu-ray and burn DVDs.

        That’s all the average consumer needs for now.
        What remains then is a matter of user experience, ergonomics and eyecandy.

        Now, if I were to shell out some money for a new desktop on the grounds of eyecandy and user experience, I’m afraid that Apple would get it, or, more likely, I would come to my senses and keep my desktop for another three or four years until it’s unpractical to use it, and maybe buy a Mac then and make it last 8-10 years.

        Not that there is anything wrong in computers lasting 10 years.

        The funny part is that it’s exactly what Apple tries actively to prevent.

      • http://twitter.com/fivetonsflax fivetonsflax

        Try Lightroom 4 some time. It brings my 8GB, Core i5 machine to its knees.

      • tobiatesan

        Oh, yes, of course, add “photo editing” to “video editing” and “audio tracking”.
        But you know the average consumer (again, I’m not talking about professionals) is perfectly happy with Photo Booth and Picasa.

        (Who am I kidding? I just WISH I could get my girlfriend to use Picasa or something instead of randomly scattering files around)

  • johnambani

    horace, have you changed your view at all for the June quarter earnings? Any updates? Thanks.

    • actualbanker

      As a reminder, he went with EPS of $11.54, which gives a trailing EPS of $44.77. Which, if using yesterdays P/E, implies a stock price of $651. I’m sure Horace will comment on the first number, while not commenting on the share price.
      I wish Horcace would get on the analyst call. I’m curious what Horace’s question and follow-up would be. Perhaps a topic for the podcast… If you had one shot, what would ask Tim Cook?

      • http://www.asymco.com Horace Dediu

        The question would depend on what they report. Generally speaking am curious about their capex spending and how that’s progressing and if they can be more specific about what they’re spending it on (servers vs. manufacturing equipment).

      • http://www.asymco.com Horace Dediu

        The question would depend on what they report. Generally speaking am curious about their capex spending and how that’s progressing and if they can be more specific about what they’re spending it on (servers vs. manufacturing equipment).

      • actualbanker

        Perhaps one the “real/approved” analysts will see your comment and ask the question. Can’t wait for the call.

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  • gprovida

    Given the rich data, http://www.vgchartz.com/article/250255/2012-year-on-year-sales-and-market-share-update-to-june-30th/, available on video games and consoles, is the same disruption occurring from iPad and iPhone as so well documented in PCs and Smart Phones. Is this industry on a similar trajectory? Is it an intermediate crisis between traditional phone vendors and PC vendors. Is there similar crisis in video game software market that presages what will happen to traditional PC software?

    • gprovida

      Is the X-Box the MS Media PC disruptor, will the Surface disrupt the X-Box, etc.? offers an interesting discussion thread. If the X-Box fits this category, does this suggest the way for the Surface to succeed is to move it into a separate division, similar the history of the X-Box and then it can avoid the disruption anti-bodies.

    • http://www.asymco.com Horace Dediu

      Thanks for the link. I think the theory would be pretty clear on this being an industry being disrupted.

  • Dave Brandt

    I occasionally check out Thurrott’s site to see how the other half lives. I looked yesterday and, sure enough, they are waiting for Metro!! (http://www.winsupersite.com/article/paul-thurrotts-wininfo/pc-sales-flat-market-waits-windows-8-143674).

    I am not making this up! Here is Paul’s opening paragraph:

    “A new generation of Ultrabooks powered by a new family of Intel processors wasn’t enough to jumpstart PC sales in the second quarter of 2012. According to reports by both Gartner and IDC, PC sales were essentially flat in the quarter as consumers wait for Windows 8 to ship.”

    Few business analysts would see the connection of 20th century absurdist theater to the high-tech industry, but you do. When a company drifts into its Godot phase, something else is going on. Other specialties become relevant. I thought of psychology and sociology first but I can see it is also the domain of the poet, novelist, and playwright.

    It’s different from just failing to act decisively at the right time — which can be years in advance. In the Godot phase, it takes energy to remain committed to the unending vigil. Yesterday Gruber (http://www.theverge.com/apple/2012/7/12/3151491/fighting-words-apple-post-pc-microsoft-pc-plus) linked to a Microsoft executive who confidently asserted that Apple has it wrong about tablets, but Microsoft has it right (and Gates had it right during the years in which he was promoting the original incarnation of Windows tablets).

    And it also takes energy for supposedly independent analysts to remain committed to running with the herd. That is another good topic.

    • http://www.asymco.com Horace Dediu

      The “fighting words” speech is exciting because it lays out clearly the distinction between the two companies’ strategies. I need to write a separate post about this but what I noted is that Microsoft sees a single platform being the home of multiple input methods while Apple separates them into distinct products positioned on different jobs to be done. I’ve already alluded to the correlation between input method innovations and the birth of new platforms. Microsoft clearly rejects this hypothesis. They see Windows as unifying any and all input and output methods regardless of how they change our relationships with computing. History has something to say about this but is there also a way to predict reliably what will happen?

      • Dave Brandt

        Well, we can try to understand what will happen in the near term. This episode is especially fascinating since Microsoft’s next move into tablets is coming from their “Windows Forever” underlying strategy. It truly sounds like their strategy hasn’t changed since Gates’s attempt to move into tablets in the early part of the century. At that time, they tried to sell the strategy of using a desktop OS with a stylus instead of a mouse. I suppose the best predictor of how well that strategy will to work is the specific history that it has.

        It’s just very odd for a company to commit to a new tablet OS while maintaining its core belief that the role of the tablet OS only to augment an OS that was designed to be mouse-driven.

        I’ve been trying the Win 8 Preview under VMWare and tend to agree with that “Fear and Loathing” piece. http://mobileopportunity.blogspot.com/2012/05/fear-and-loathing-and-windows-8.html

        I think that’s a very fair review.

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  • Anurag31

    The question that need answer is that spent on tablet are in addition to PC or at the cost of it? The answer in my opinion will be different for enterprises and personal consumers, in the former enterprises cannot solely go in tablet only mode as of today as it is not there yet in terms of productivity appln, it might be there for some specific jobs like sales or field service etc but not for corporate wide replacement but it will bring in additional areas in some industries like health care and education. So PC makers have more time to Prepare for disruption there, as when tablet grows more capable both in hardware and software wise, a lot will also depend on Windows 8 due to sheer existing investment currently.
    In personal consumption disruption is clearly much further where ipad has definitely either elongated or replaced the desktop refresh cycle which is getting reflected in (mostly) stagnant growth. Also in newer markets new consumers may not even have a PC and opt to have tablet as their primary device thus taking away the prospect of growth from PC makers from emerging markets.
    It would be nice to do a graph of these device sales on enterprise vs consumer and with developed vs emerging markets.

  • N8nnc

    User interfaces evolve to capture greater levels of intent. Old interfaces never (rarely?) die, they just become overwhelmed by the new.
    In the beginning, programmers thought in terms of bits in registers (machine code). The user interface was switches on the front panel.
    Then they thought in terms of machine instructions and the interface was assembly.
    Over time, programmers thought in higher levels of abstraction & utility, so the languages grew.

    Personal omputers started with text-only interfaces. Mac promulgated the desktop & mouse desktop metaphor and added a personal publishing role. The spreadsheet was the killer business app. The Internet expanded computers’ role into communications. Graphics cards added gaming.

    Apple is now moving to a new metaphor, which I don’t think has been given an identification. It’s much more personal with touch & voice interaction, body-scale size/form, always-on, no-maintenance, always-connected, location/situational awareness, with personal assistant functions. [I pause to reflect on how far we’ve come, especially in the past five years – we are living in the future.] There is still more intent to capture.

  • professortom

    Have you seen this bollox that IDC is pushing taunting Mac sales are down in such a manner as to make people panic? Link

  • Davele

    Does this analysis look at H/W or O/S?.
    It seems we are looking at H/W sales to make conclustions about the market size of the O/S.
    Given the significant % of people I see who buy Mac’s but run Windows native or via Parallels it may be unwise to conclude a negative Windows trend. It would be nice to have data on “% of Macs used as PC Compatibles”

    Clearly the trend towards Cloud + Mobile devices is increasing.
    However it will be nice to get a few more data points to determine the true rate of this trend. A part of this recent spike may be transient. i) The recent Apple launches saw a rush of sales, possibly many existing users just upgrading their device & not adding to the market size. ii) Due to their lower price point, mobile devices they are much more like to be sold as Xmas presents. Hence possible artificial spike.

    “Unit sales” does not always equate to market size or “Units in use”.

    A higher % of Mobile phones are lost (& replaced) than Laptops (or desktops).
    The cheaper the device the greater the likelyhood that post-Xmas, higher numbers become “the Unwanted gift” just left in a draw & not used. eg: Lots of people own multiple mobile devices but only use one or two.

    Apple may be driving the change but they don’t have a big unit % in any market.
    What they do have is an extremely high attachment ($ per unit royalty) income. iTunes & apps are not only high $, the revenue is nearly all profit.

    These factors aren’t relevant if you just sell devices. But market size is important if you are attempting to market s/w or services to actual users.

    • http://www.asymco.com Horace Dediu

      iTunes store runs at break-even for all media including apps.

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