A Tough Quarter for PCs

Arthur Cole
Slide Show

Desktop Virtualization and the Death of the PC

It may simply be a question of "when" not "if" a range of mobile computing devices displaces the PC.

We all knew it was going to be bad for PCs and other hardware, but the latest numbers coming in from the field are sobering nonetheless.


Sales are down across the board as both enterprises and consumers adapt to the new data environments brought on by virtualization, the cloud and mobile devices.


Hardest hit was HP, which saw net earnings drop some 44 percent in the last quarter on an overall revenue decrease of 7 percent compared to the same period a year ago. The decline was led primarily by the hardware side of the business, with the Personal System Group, Imaging and Printing and Enterprise Servers, Storage and Networking all posting losses. It can only be a cruel twist of irony for former CEO Leo Apotheker, who tried to shed HP's PC business and push more toward software assets like Autonomy Corp. before his ouster late last year.


The quarter wasn't quite so bad for Dell, but it still portends troubled times for low-margin hardware lines. The company saw its net drop 18 percent even though overall sales - hardware, software and services - gained 2 percent. However, consumer and business hardware sales dropped 2 percent and 1 percent respectively - again, not terrible, but an indication that users are increasingly flocking to Apple products over traditional PCs and laptops.


At the same time, the top brass at IBM must be breathing a sigh of relief in light of the decision six years ago to spin off its PC business to Lenovo. That firm has actually made quite a name for itself, rising to become the number two PC vendor with a market share just a shade behind HP. The company has apparently found a winning strategy by keeping its overhead low while still providing high-quality devices at a time when volume sales are dwindling and margins are cut to the bone.


But as I mentioned, hardware troubles do not translate into tough times for software or services, provided you keep your platform options open. Everyone from Salesforce to Autodesk to SugarCRM are reporting healthy profits for the quarter, in part by accommodating both traditional and mobile platforms.



The hardware market has long been a fickle mistress. Refresh schedules are usually one of the first things to suffer when the economy goes south, so there is every reason to expect stronger sales as things heat up. The longer trend lines, however, do not favor tried and true platforms like PCs, particularly desktops.


All you have to do is take a look at what the kids are using these days to see how the next generation of knowledge worker interacts with data.



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