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PCs Get Hammered -- Not by the iPad, but By Users

Two market research firms released their PC market numbers for the first quarter of 2011, and the results look grim for the industry. Gartner saw unit volume drops of 1.1 percent worldwide and 6.1 percent in the U.S., while IDC saw global shipments down by 3.2 percent and U.S. by 10.7 percent. Neither IDC nor Gartner includes media tablets, such as Apple's (AAPL) iPad and Google (GOOG) Android devices, in the PC numbers, but both said that these new devices were a big reason for the decline. (Well, at least the iPad, since it's the only one selling in large numbers.) Messy, messy.

It's tempting to look at this as an iPad-slays-the-PC-beast tale. But that's a mistake, and misses two issues. One is recent history and what drove an unusually large growth in PC purchases last year. More important is the second factor: For decades, PC companies have treated their products as hammers to fit everyone and every circumstance. All a combination of advancing technology and product innovation did was to underscore how out of touch the industry has been.

Set the stage
To understand the inclination to finger the iPad as the reason for falling PC sales, consider some context. Last year was a big one for PC sales, following 2008-2009 austerity thanks to the Great Recession. Overall, 2010 PC shipments were up 13.8 percent over 2009. So it's not surprising that 2011 looks a bit weak so far by comparison.

When you look at the numbers, the immediate focus on the iPad is understandable, because the fit seems too good to ignore. Apple sold 7.3 million iPads in its fiscal year 2011 Q1 (the last calendar quarter of 2010). It seems reasonable to expect at least as many in the first calendar quarter of this year, even with the supply chain problems in Japan.

Who needs a PC, anyway?
Apple CEO Steve Jobs was right when he described the tablet as another kind of device, something between a PC and a smartphone. A tablet can't do all that a PC can. But it can do a lot. And the real user problem for the PC industry is that most people don't need the full power of a personal computer most of the time. In fact, many don't even need what a tablet can offer much of the time.

Look around the next time you're at an airport. You'll see many people using their smartphones to go through email. A smaller number will have tablets and laptops, and the ratio of tablet to laptop users will shift over the next few years as more devices come on the market and people increasingly decide to physically downsize what they carry. Why lug a laptop when a tablet will do? And if you plan mostly to check email and listen to music, why bother with the tablet?

But the PC industry is sort of stuck with the one-size-fits-all personal computer. Some of the vendors have tried smartphones or tablets, but with little success. It's hard to innovate when you also want to protect the cash cow PC business.

You can see the same dynamic unfolding with Research in Motion (RIM), as the company designed the BlackBerry PlayBook to work with a BlackBerry smartphone. It's the identical mindset: someone wants to protect the main franchise. That way of thinking makes them blind to why people actually use computers of any sort and what they do with the devices.

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