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The PC industry celebrated its 35th year anniversary in 2010. From its humble beginning as hobby computer kits in the spring of 1975, the PC industry has come a long way. In 1975 less than 50,000 PCs were sold with a value of about $60M. From this limited start the PC industry has grown to unit sales of over 280M units in 2009. PC retail revenue topped $330B in 2007 and 2008, but is in a declining phase due to continued price declines and a shift to low-cost products such as netbooks. The next table shows the tremendous growth of the PC industry in the last 30+ years. And the growth of the PC industry will continue, but at much lower rates than previously-at least in terms of unit sales.The sheer size of the PC industry limits its growth rate, but the yearly worldwide sales will grow by over 40% in the next five years—from 231M units in 2006 to nearly 335M in 2012 or a 6.3% compound annual growth rate. Worldwide number of PCs in-use surpassed 900M units in 2005 and will reach 1.47B units by year-end 2011. Worldwide cumulative PC sales topped 1B units in 2002 and will top 2B in 2007 and 3B in 2011. PCs in-use reached 241M in the U.S. in 2006 and will top 300M in 2012.
Yearly PC sales for the U.S. and the main regions of the world are summarized in the next figure. North America will remain the largest region until 2009. All figures are in millions of units.
Figure 1.1: PC Sales by Regions
PC revenue was growing slower than unit growth due to considerable price declines and is now declining due to lower unit sales growth than price declines. The worldwide PC revenues were $251B in 2000, which increased to over $333B in 2007. Worldwide PC revenue will decline to $300B in 2010 and will remain in this range for the next five years.
This PC forecast consists of three product segments—PC servers, desktop PCs and mobile or battery-powered PCs. Mobile PCs are dominated by notebook PCs. Sales of the three PC segments are shown in the next table.
The desktop PC segment remained the largest PC segment through 2008. Both PC servers and mobile PCs are taking market share from the desktop PC segment. Mobile PCs include all laptop, notebook, netbook and other mobile PCs. The emerging tablet PCs and wearable PCs are also included in the mobile PC segment. PDAs and Smartphones are excluded. Worldwide mobile PC unit sales topped desktop PC sales in 2009 due to the exceptional success of netbook PCs.
PCs in-use for the main regions of the world is shown in the next figure. Asia Pacific became the largest region for PCs-in-use in 2004. All figures are in millions of units.
Figure 1.2: PCs In-Use by Regions
Worldwide PC in-use has grown from 98M units in 1990 to over 1.2B systems in 2008 and is projected to reach nearly 1.9B units in 2014.
PC sales per capita and PCs-in-use per capita indicates the maturity and PC penetration rate of a given market. The higher the PC penetration rate is, the lower the growth is. The next table shows the PC sales per 1,000 people and PCs-in-use per 1,000 people in the U.S. and worldwide.
The table clearly shows that the U.S. penetration is rising rapidly and signals that PC growth rates are likely to decline. Western Europe also has relatively high PC penetration rates. The rest of the world is further behind in PC sales and PC usage per capita and therefore has room for continued growth.
From its hobby computer roots in 1975, the PC grew to become a useful productivity tool by 1980 for office applications. In the early to mid-1980s the foundation was established to make the PC ubiquitous by the 1990s. De facto hardware and software standards were established and the key PC application segments emerged.
By the mid-1980s the PC became the driving force for the whole computer industry, and it retained this crown for over 10 years. PC industry dynamics changed by the late-1990s when PCs became the means to get to the Internet. Since the late 1990s the Internet has become more important than the PC industry. Today the Internet applications are the main driving force for the PC and the whole computer industry. But it is important to understand that the foundation of the Internet is mainly based on the PC industry and a vast land-based packet communication network. In the next decade a cellular-based packet communications network and broadband will further grow the Internet applications and the Internet access devices.
Over the next 10 years the PC industry will prosper and thrive with two additional driving forces—consumer electronics devices built with computing platforms and mobile devices such as Smartphones and multi-function cell phones. The PC industry is very competitive and has a good record of adapting to emerging technologies and market trends. This is likely to happen again and the PC industry will embrace information/digital appliances and mobile devices.
Computer hardware and software platforms are invading
the fixed function electronic devices in the
telecommunication, consumer electronics, auto
electronics and related industries. The long-term trend
is clear: most electronic devices will sooner or later
be based on microprocessors, software, networking and
other computer hardware technologies. This will happen
because the cost decline, capability growth and
flexibility of computer platform-based designs
eventually become the best solution. The key question is
not if this will happen, but when will it happen in the
various product segments.
Dell and HP are currently the leading PC manufacturers and they will remain the top 2 vendors for at least the next few years. The next table shows the historical PC sales and future projections of these two companies. Note that the PC sales of Compaq and HP are combined for all the years including the pre-merger years shown in the table (1990, 1995 and 2000).
Compaq, Dell or HP/Compaq have been the PC sales leader since 1994 in the USA and worldwide. Dell became the worldwide PC sales leader in 2001, but was surpassed in 2002 by HP because of its merger with Compaq. Dell took the lead again in 2003 and kept the lead through 2006. HP regained the worldwide lead in 2007 and is forecasted to retain the lead through the forecast period. Dell is likely to retain its lead over HP in the USA in the next five years.
Dell has a much stronger market share in the USA than worldwide. This is because Dell’s business model is fully developed in the USA, but remains in the start-up phase or in the early to mid-level development phase outside the USA. As Dell’s business model grows and takes hold outside the USA, Dell’s market share will strengthen. Dell may not establish as high a market share outside the USA, but the market share will grow as Internet sales grow in the developing countries. Dell lost market share to HP starting in mid-2006 due to HPs strong performance. In response Dell is starting to use the reseller distribution channels and this should strengthen Dell’s competitive posture versus HP.
The report and spreadsheet also have PC sales estimates for six other PC companies: Acer, Apple, Gateway, Lenovo, NEC/Packard-Bell and Toshiba and historical sales data for Compaq, IBM and Gateway.
The PC industry is seeing several new opportunities. The next table summarizes the many new opportunities created by information appliances and wireless devices for the PC industry. There are four new opportunities that are line-extensions of the existing PC market. There are also several opportunities that expand PC usage as the infrastructure for the emerging information and wireless devices that are using computer hardware and software platforms as their basic architecture.
Multi-PC households use home PC servers to simplify and lower Internet access cost and to coordinate other PC activities. A home server may not always increase the number of PCs in a household because the function is served by one of the existing PCs. However, the home server PC is usually a more capable PC and increases the average PC price. The home PC server is already established and will continue to grow in the next decade.
The Media PC is focused on handling multi-media functions such as TV, video, music and photos. Thus the Media PC will be competing with the traditional consumer electronics products. The Asian and European consumer electronics companies have formed a consortium to promote Linux as the standard for media PCs. Windows XP Media PCs have been available since 3Q’2002 and has a lead over Linux-based devices, which is now emerged. The Media PC is a growing opportunity that has significant future potential.
The netbook is barely two years old and has had a tremendous impact. The netbook also has the potential to expand the PC market because it may become the 3rd PC for office workers or a 2nd PC for home users. The netbook PC may also become an extra PC in the home for its easy portability around the house or as a travel companion. The Tablet PC is likely to expand the overall PC market because a portion of the mobile work force that previously could not use PCs now have a product that can enhance their productivity and capabilities. The Tablet PC may also increase the number of multi-PC workers. This report has a forecast for the netbook PC and the tablet PC market.
The Mobile Internet Device (MID) is similar to the netbook PC with an embedded broadband connection. The MID category has been articulated by Intel using its new low-power Atom microprocessor. The Smartbook is similar to the MID and is considered a cross between a Smartphone and a netbook. Smartbook and MIDs are likely to compete with high-end Smartphones. The Smartbook and MID are also expected to be a platform battle for Windows and Linux-based operating systems. Smartbook and MID products may also become a 3rd PC for many office workers or home users. The opportunity for Smartbooks and MIDs looks very promising.
Technology advances allow PC functionality to be put in smaller packages, which means handheld PCs will eventually become a viable product segment. There are a few handheld PCs available from companies such as Antelope Technologies, OQO and others are developing Windows-based handheld PCs. Handheld PCs will overlap will high-end PDAs and Smartphones. Handheld PCs will be attractive to a portion of PDA users due to availability of the PC software base. The market size of the handheld PC segment is unclear, but could be significant in 10 years.
Information appliances are new opportunities for the PC industry, because they will use PC hardware and software. PC microprocessors—usually low-end versions or earlier generations—will be used in a significant portion of information appliances. PC peripherals such as disk drives, printers, pointing devices and others will see widespread use with information appliances. PC hardware technologies such as flat displays, keyboards, touch panels and memory cards will be used in every information appliance. Information appliances will also use PC software and software based on current PC software. The Smartbook and MID are likely to remain information appliances.
The infrastructure that will be used to connect and deliver services to the information appliances is another opportunity for PCs—especially PC servers. Most of the information appliance service content will be stored in databases that will run on PC servers. The service content will be distributed to additional caching servers as part of the Internet infrastructure. Caching servers are used for performance response time enhancement. The number of PC servers needed to feed the information appliances will be proportional to the installed base of information appliances and will be in the millions of units by 2014.
Another big PC opportunity is the need that will develop in homes that have multiple information appliances such as web set-top boxes and digital TVs. A large portion of these homes will need a server that coordinates data transfers, data storage and other functions between the information appliances. These home PC servers are already emerging for multi-PC households and will get a further boost from multi-IA households. The worldwide number of home PC servers will be in the tens of millions by 2014.
The software and content for information appliances will not be developed on information appliances, but on high-end PCs. Software development systems for information appliances may be another million unit opportunity for PCs by 2010.In summary, the emerging information appliance segment will have little impact on the PC industry in the next five years. Information appliances may take some sales away from PCs, but they will also generate new opportunities for the PC industry. Millions of PC servers will be needed to support the hundreds of millions of information and web appliances that will be used in homes, offices and mobile locations. PC appliances, which are information appliances based on PCs, will provide another opportunity for the PC industry. The introduction of PC appliances embraces the information appliance market by creating easier-to-use application-specific PC-based products.