The End For PC Makers?

John Whitefoot: The first raft of first-quarter earnings reports are in…and they’re not a total surprise. Against the backdrop of a weak U.S. economy and waning consumer confidence, some big go-to stocks are beginning to show signs of distress—few more (right now) than makers of personal computers (PC makers).


Two research companies tracking PC makers delivered their reports for the just-completed fourth quarter—they’re not encouraging. Gartner pegged fourth-quarter PC shipments at 82.6 million, a 6.9% year-over-year decrease. For all of 2013, it said sales fell 10%—capping off the worst decline in PC market history. (Source: Hardy, Q., “For PC Makers, the Good News on 2013 Is That It Is Over,” The New York Times web site, January 9, 2014.)


Numbers from International Data Corporation (IDC) were slightly better (or less bad). It said PC shipments fell 5.6% year-over-year to 82.2 million units. For all of 2013, IDC reported that 314.5 million PCs were shipped—which reaffirms Gartner’s reported 10% drop from 2012. (Source: Ibid.)


But that’s where the similarities ended. When it came to the future of PC makers, Gartner said the PC market could improve in 2014; meanwhile, IDC said there was no reason to believe the market would stabilize. Why? Because PCs are giving way to mobile devices, such as tablets and smartphones.


Going forward, PC makers will have to ask themselves if younger, on-the-go consumers, who use their mobile devices as a first computer, will ever want to invest in a fixed device like a PC.


IDC also said sales of PCs fell to 108 million units in the Asia Pacific (outside Japan) region—marking the first annual double-digit decline for this area. The decline in PC sales was the worst for PC makers in Taiwan, where fourth-quarter sales for Acer Inc. tanked by 28.6%. In a move that would shake up the overpaid underachiever on Wall Street, the Taiwanese PC maker said its executives will take a 30% pay cut. (Source: Gold, M., “Acer fourth-quarter loss leads to 30 percent executive pay cut,” Reuters, January 17, 2014.)


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