The PC industry is in shambles and no one is going to be hit harder than Microsoft (MSFT) and Intel (INTC), according to the latest forecasts from market research firm Canalys. Consumers continue to favor Android and iOS tablets over Windows and Intel (a.k.a., “Wintel”) PCs. The research firm found that combined shipments of desktops, netbooks and notebooks in the fourth quarter of 2012 declined roughly 10% year-over-year. The Wintel PC market is expected to suffer further and is estimated to fall from a 72% market share in 2012 to a 65% share in 2013, representing a 5% decline in unit shipments.
“Pads and, increasingly, smartphones can perform many of the day-to-day computing tasks that most people require,” said Pin-Chen Tang an analyst with Canalys. “Wintel PCs are becoming less likely as an individual’s first choice of computing device for everyday tasks, such as sending e-mail or web browsing.”
The launch of Windows 8 was meant to revitalize the market, however it has had little to no impact so far. Despite sales roughly equal to its predecessor, a majority of consumers have shunned the new operating system and instead favored OS X or Windows 7. The overall consensus from analysts, consumers and the media is that Microsoft’s Metro user interface is too confusing for the average PC buyer.
“The launch of Windows 8 did not reinvigorate the market in 2012, and is expected to have a negative effect as we move into 2013,” explained Canalys analyst Tom Evans. “Windows 8 is so different to previous versions that most consumers will be put off by the thought of having to learn a new OS. An additional barrier is the potential increase in cost that Windows 8 brings, as it is perceived that a PC with a touch-screen is needed to get the best user experience. In the current economic climate, this will be enough to make people delay purchases as they wait for prices to fall.”
Canalys predicts that between 2014 and 2016, the PC industry will see a larger mix of different form-factors as consumers become more comfortable with touchscreens and Windows 8. In addition, the firm expects the tablet market to grow an average of 37% each year between 2012 and 2016, with volumes reaching 389 million units and accounting for 59% of all PC shipments. The tablet growth will be driven by Apple’s (AAPL) iPad, iPad mini, low-cost Android alternatives and hybrid PCs such as the Surface Pro.
“It is clear that Microsoft is now pushing touch as the primary input method for Windows, but keyboard and mouse are still needed for legacy applications,” Canalys analyst Tim Coulling added. “Following the launch of the iPhone, the shift from keypad/keyboard to touch input on smart phones was rapid. The popularity of pads and the inevitable decline in touch-panel prices will cause the same trend to emerge in the PC market.”