Steve Ballmer Is Right: The PC Market Is Getting Bigger

At The Wall Street Journal’s D8 conference in June, Apple CEO Steve Jobs compared the PC to a farm truck, saying that when America was an agrarian economy: “All cars were trucks because that’s what you needed on the farm. Now trucks are one in 25 to 30 vehicles sold.” Whether you think PCs will shrink or grow in importance seems to depend partly on semantics. During the same conference, Microsoft CEO Steve Ballmer countered: “I think people are going to be using PCs in greater and greater numbers for years to come. . . . The PC as we know it will continue to morph form factor. The real question is, what are you going to push.” 

Jobs may not view the iPad as a PC, but we do.

Our view is that the consumer PC market in the US is indeed getting bigger: Over the next five years, PC unit sales across all form factors will increase by 52%. In fact, desktops are the only type of PC whose numbers will be fewer in 2015 than they are today — and even desktops will benefit from innovation in gaming and 3D. We detail our findings in a new report, The US Consumer PC Market In 2015. Clients can read the full report on our Web site, but here are a few key takeaways:

  • US consumers will buy more PCs in 2015 than they do in 2010.
  • Growth will come from new form factors like tablets, but laptop sales will increase steadily also.
  • Tablets will cannibalize netbooks, outselling netbooks starting in 2012.
  • In 2015, 23% of all PCs sold to consumers in the US will be tablets.
  • Desktops aren’t dead. Fewer desktops will be sold in 2015 than in 2010, but in 2015, they’ll still be used by more consumers than any other type of PC.

The bottom line for product strategists: Plan for growth in new form factors but also anticipate the continued relevance of “traditional” PCs, which aren’t becoming farm trucks anytime soon. 

Comments

Fascinating. My company

Fascinating. My company Gen-Sights, which helps companies market to Boomers, predicts that Ipads could be a PC replacement for that demographic as well as for seniors. Did your research bear that out?

Do not sleep

If netbook makers do not "sleep" on their current product capabilities and the excessive hype about tablets lately dies out in a few months... the market share prediction may look better for netbooks.

My personal 2 cents worth

First, my perspective is a bit different than most. I develop stuff for the web. So my needs are a bit different as well. I am also well beyond my teen age years.

I do not see netbooks as useful to me primarily because their keyboards are too small for power use. On the other hand, developing for them is easy since they are largely the same as a "real PC."

Developing for tablets is even more difficult simple because they aren't intended to be both the target and the development platform. And, as another research article mentions, Microsoft is behind in making a tablet that is "likeable."

However, as a developer, I see the tablet as the thing I need to target. Think of the Little League mom who wants (or has) to keep score. A paper score pad is so passé! And if the roster changes, click one button and the opposition and umpire get them instantly without having to stop the game.

Or how about a tablet that not only has your shopping list, but knows which aisle each item is on (because you swept your tablet over the do-hickey at the door and it updated the layout) and organizes your trip through the market to optimize your busy schedule. Shoot, how about it checking your two or three favorite markets for the best specials?

Personally, I see the netbook only as a form factor trial for newer laptops. The real innovation will come from the tablet. I'm already designing things in my head because this is what people will want - not in the near future, but as soon as they see one do what it can do.

And when they add Bluetooth to the tablet, even us old-fogies might trade in our smart phones for an "intelligent" phone.

Tablet computing for the average person

I have the general layout of my grocery store memorized, but I would LOVE to be able to scan a device with an iPad or iPhone app and have all the data line up with my grocery list. That would be a godsend.

I think your thinking is right on target.

Nancy: I think what you're

Nancy:

I think what you're saying about the "tablet" is right on. I'm thinking of a senior who wants some functionality -- email, looking up medical info, sharing photos with family, maybe Facebook, but not lots of other complicated stuff. And Boomers who want to take a few books with them on a trip, share photos, etc. And anyone who'd like the apps of an iphone but can''t deal with the small screen/buttons/or AT&T. I agree there will always be a place for real computers, but with a little more innovation, without too much complexity, I think tablets are a device that's time is here.

oh my

For the unsavvy, I will explain.

Steve was right, people dont need a full blown personal computer. He was also right the the iPad is not a PC.

Apple has released many personal computers including the first one. Apples personal computers are not PCs. The never have been. PC was IBMs name for its personal computer, and they havent changed much since. PC is a commodity parts, generic computer for off the shelf sale that has dominated the "personal computer" industry for decades.

There is not a single computer Apple makes or has ever made that is a PC. So what you are really saying in your ignorance of history is that the iPad is a computer. And yes its even a personal computer. But dont conflagrate the term PC with anything apple makes. Its historically incorrect from every perspective like calling the Apple II a PC.

So if we agree by virtue of the facts that Apple does not make PCs of any kind, the PC market is in fact shrinking. The personal computer market is however expanding.

Hopefully we'll see the personal computer market say goodbye to the PC. The little acronym that didnt understand what it was supposed to stand for.

Well...

Bob, technically, you are correct. However, while IBM called its personal computer PC (I don't know if they trademarked the name, but I suspect not), in legalistic terms only those made by IBM would truly be "PC," all others were clones. So HP's and Dell's are also not "PC" yet you are clearly lumping them into that category, thereby diluting your own argument.

In the real world, many things take on the name of "the firstest with the mostest." For example, many people call all chain link fences "Cyclone fences;" table tennis is largely referred to as "Ping Pong;" to some all sodas are "Coke."

And so, to most people who don't stick to the legalistic definitions, all personal computers are "PC," including those made by Apple. I suspect this usage is even more prevalent than the examples I gave above.

I don't believe Mr. Jobs was intending that discussions of his quote were to become political discussions on the relative merits of an open architecture as opposed to a proprietary one.

I see tablets being used in a way that the users primarily use it for minimal data entry and get back useful information (rather than "data") that has immediate, tangible application to RealLife™. Personal Computers had not evolved to that state yet because of historically inadequate computing power and lack of vision (probably due to "baggage" as it is often called).

The iPad has offered a new vision based on a new paradigm; in that light, no it is not a PC, but it is definitely a new breed of intelligent appliance.

Computers

"There is not a single computer Apple makes or has ever made that is a PC."

I used Apple PCs through the 80s and 90s and let me tell you, Apple made plenty of PCs. The only real difference was the mouse. Hence the song, "I'm a right clicka, I'm an iBook flippa."

Back then Apple was known for making PCs for graphics professionals--that was the only reason to buy an Apple. But that reason didn't last long. All of Apple's graphics apps were ported to Windows.

In the 90s people stopped calling them "IBM PC compatible clones" and instead called them "Wintel" machines. Windows+Intel. Now nearly everything is some variation of Linux in the cloud, so neither the OS or the CPU distinctions really matter.

So why call your computer a PC? I think it's a matter of convenience. Even though computers are not really personal anymore. You can run a server on your desktop or phone or tablet, share the same app with millions of people, use multiple logins, etc.

As far as the iPad, tablet computers have been around since the 90s. The only difference now is touch-screens are more affordable and CPUs are fast enough now to make the touch interface responsive. Apple is not responsible for either advancement. Their size and shape are not new or original either.

From a software perspective, the iPhone and iPad are Linux clients in the cloud. Without the Internet (served by Linux) these devices are useless.

Apple ad: "It's designed to be a personal computer."

You could argue smaller computers are even more "personal" because they fit into your pocket.

Apple in fact advertised they make PCs!

Apple ad: "It's designed to be a personal computer." (1st paragraph) http://bit.ly/9n5z8K

since you're feeling technical...

"Hopefully we'll see the personal computer market say goodbye to the PC. The little acronym that didnt understand what it was supposed to stand for."

Is "PC" really an acronym? George Carlin doesn't think so..
"An acronym is not just any set of initials. It applies only to those that are pronounced as words. MADD, DARE, NATO, and UNICEF are acronyms. FBI, CIA, and KGB are not. They’re just pricks."

Apparently there's a debate over this as well.
http://www.acronym-guide.com/difference-between-acronyms-and-abbreviatio...

Its getting lousy isn't it.

iPad may or may not be a PC. However as iPad is iPod Touch's big brother, then iPod Touch and iPhone are PC as well. How about those GPS navigating devices which can also read ebooks, play music, watch movie, and even surf Internet? If you expand further you can actually count in those refrigerator with Internet access, POS, ATM, and practically anything with a CPU and owned one or few persons.

I think this article forgets to tell us from what standpoint to argue that iPad is a PC and at the end deduce that PC market is (in fact) growing.

Back at D5, Walt Mossberg

Back at D5, Walt Mossberg defined smartphones like the iPhone and devices with a mobile OS as "Post-PC devices". He asked Steve Jobs and Bill Gates about the future of these "Post-PC devices". Naturally, as the iPhone had only just been announced, Steve was a bit reluctant to reveal the future, and Bill Gates said his usual vision that didn't come true, you can see that Steve Jobs at D8 is going to refer to iPhones and iPads in the same context that Walt had already defined, seeing as they were talking at a D Conference.

Sure, you can define virtually everything as a PC, but not a traditional PC. That's the distinction Walt made and Steve Jobs was adhering to.

As for those traditional PCs, if you showed me a chart that made the point that desktop PCs are going to drop from 45% in 2008 to 18% in 2015, I'd consider them farm trucks.

iPad is to PC as xBox is to PC

The simple answer is this. Technically speaking, most electronic devices today have a cpu and memory in them but they all can't be considered PC's. Just as the concept of a phone has been shifted with the launch of the iPhone (which by the above statement, Steve Ballmer would probably consider it a PC), the concept of the iPad in the general public mind is vastly different than a PC such as a netbook, laptop or desktop computer. The iPad is more like a Kindle/iPod touch hybrid. It has the hands-on feel of a kindle, being book-like and tactile, yet it's vastly more content oriented like the iPod touch. I think very few people would categorize the iPod touch as a computer or the iPods that came before it.

Thanks to the highly technical nature of the earlier computer (pre Mac/Windows), the general public was slow to approach it. The form factor and ease of use of the iPad, though it can do computer oriented task, make it a different entity in the minds of the public who see it a much more approachable than GUI oriented systems.

Many people remained on landlines for the simplicity of use compared to cellphones until the iPhone pushed the envelope and changed the expectations of what a cellphone is and how it should be approached.

Hopefully the iPad will do the same and will help to usher in a new era of software development that is reminiscent to what was seen on shows like Star Trek.

IPAD Sales

Seems confusing. The ipad has already sold close to 2 million units. If the iPad is a tablet, your charts seem to be suggesting a slowing of iPAD sales to less than an additional 2 million for the remainder of 2010. Am I reading the charts correctly?

I guess it depends on where

I guess it depends on where ones vested interests lie. In Ballmer's case referring to tablets and iPads as PCs are his way of keeping Microsoft relevant in the post PC era. Microsoft so far hasn't found its place in this newly emerging sector of the IT industry. Until they find a way to make themselves relevant in this new era, all devices with a cpu running an operating system that is involved with computing in some form or other will always be referred to by Microsoft as a PC. So technically Ballmer will always be right but functionally these new devices are presenting us with a whole new paradigm in computing way beyond the point and click of the previous generation. For Ballmer to admit that PC's will diminish means that Microsoft has admitted defeat and ceded leadership of the tech sector to rivals like Apple and Google.

Missing the point...

It really doesn't matter whether you categorize iPad as a PC or not. Fact is, Ballmer and crew have nothing to compete with it. I feel sorry for anyone actually depending upon you for consumer product strategy, a least in this area. You're getting caught up in a Ballmer-style banter of semantics and "rounding errors" and missing the real issue. "PC" growth has gone mobile and Microsoft has been left behind. For twenty years the characteristics which have come to define the PC most succinctly are the Intel processor and the Windows OS, neither of which will work in a tablet.

Your predictions on tablet sales are ridiculously, well, ridiculous. Apple is gonna sell over a million of the things a month, not counting back-to-school and holiday. Every company that fancies itself still in the game has announced they'll introduce something in a tablet form factor before the year is up, and I'm sure they'll probably sell a few as well. The ones that are really serious are seriously searching for some other OS besides Windows.

Of course Ballmer is going to debate the linguistics of what constitutes a PC. It allows him to avoid the real issue of figuring out how he's going to get Microsoft software on hundreds of millions of mobile devices.

Big iPad adoption in enterprise/ERP as well

I think many analysts are underestimating tablet usage because they are only thinking about "traditional mobile" use in consumer and mobile enterprise.

Based on our group's experience, iPads have enormous unrealized potential in corporate/enterprise applications (Peoplesoft, SAP, Oracle, etc).

The key is to recognize that almost half of traditional corporate users are ill-served by traditional corporate applications on laptops and workstations. The iPad has the potential to be an alternate access device for these big systems, which is better tuned to these users.

That's a huge new market for tablets that few are considering.

"Corporate Users"

Why would any serious developer bet his future on an iPad app with Steve Jobs able to pull the plug on a whim?

Developers are betting on the web, because it's going to stand the test of time and it doesn't require starting over from scratch. Their "iPad strategy" is to make sure their web app works at iPad resolution: 1024x768.

Don't fool yourself. In this

Don't fool yourself. In this analogy, Microsoft can pull the plug many times in the past decade, Google can pull the plug as well. Whatever you take, you share the risk with the platform you choose. Safe bet is as difficult to find as free lunch.

Apple already won...game

Apple already won...game over. Most developers have figured that out and are jumping on board rapidly. The few holdouts just sit in the corner and mutter.

Not quite

Yes, they are the "firstest with the mostest" right now, and are certainly going to be front-runners for quite a while. However, Microsoft is not going to sit back forever (I suspect their biggest challenge is a physical box). Apple seems to have a problem with supply; come on, 4M in two years is not many. And then most developers would rather "fight than switch."

The battle is far from over. Apple could win it, if they would ramp up both production and application development. Some really nice, innovative apps could cement their position. But the full-blown PC (by any name or definition) is here to stay.

Get real!

I just went to oDesk and iPhone development is the 14th most in-demand skill for May. Nowhere near #1. And very small YoY increase compared to Android. iPad is not even on the list. Like I said, the iPad is simply a 1024x768 web browser from a developer's point of view.

Tables, iPads, whatever

We don't really care if it's an iPad or some competitor, as long as it's a tablet with the same form factor (touch screen, battery life, easy interface, seamless link equivalent smartphones, etc.). The older tablets failed on those counts and Apple has changed the game.

If Android and/or Microsoft come out with viable tablet competitors, then fine, people might work with them. But for now, the iPad/iPhone system is the only "game" in town. And let's not forget that, if Apple can build up enough of a lead, and become firmly entrenched as a standard platform, then it won't matter what Android or MS do. It's very hard to shake a standard that has been established. Microsoft's entire existence is based on the fact that they set up as the standard OS for PCs. Now that process may work against them.

And by the way, the argument about "number of developers on a platform" is in my view irrelevant. This world is driven by end users, not IT people. It's the end users who are forcing their organizations to support iPads and iPhones. It's the End users who pay the bills and ultimately control what gets developed or not developed for tablets especially (much more so than work stations). And right now, in the organizations I'm working at, the end users are interested only in iPhones and iPads.

Woops! Apple sells 3 million iPads in 80 days

Maybe you should put your report in the shredder.

http://www.prnewswire.com/news-releases/apple-sells-three-million-ipads-...

Bad Research!

I cant believe how off you are (Sara), with all you research your conclusions were/are so off base and simply ridiculous. Apple has already sold more than 3 million iPads (most of them in the United States) in less then 80 days. Do you still believe they will only sell 3.5 million in the United States by the end of 2010. Back 2 School and Holiday Sales each alone can create sales of over 3.5 million iPads.

Are you guys planning to

Are you guys planning to update your research, or are you too embarrassed to say anything?

As for the "is the iPad a PC?" debate — you're missing the point. Regardless of what you want to call them, "computers without keyboards and mice" will become more popular and start to displace "computers with keyboards and mice". And people seem to like the touch interface that Apple has designed more than they like the stylus interface that Microsoft has been trying to push for the last decade.

$1700+ Article

It's hilarious that she's selling this report for $1700. Her data and estimations are so off base, 3.5 million tablet type devices in 2010 from all manufacturers? Apple just sold 3 million in 80 days. So you're estimating 500k tablets will be sold for the rest of the year? Can't believe this is a research firm... even I could come up with better estimations by just standing outside an Apple store and seeing how many people come out with iPads. This $1700+ research article is a joke.

Painting Microsoft as facing

Painting Microsoft as facing a difficult paradox gives Ballmer and the management team too much credit. It implies that Defend & Extend behavior is a good tradeoff compared to investing in growth markets. This isn't really a trade-off because good companies pursue both courses, growing the existing business as long as possible AND investing in new growth markets simultaneously. See more at http://bit.ly/91mvMv

Laptop share

What is the share of laptops vs desk tops in the commercial/public (non-consumer) segment?

Well said. In the future,

Well said. In the future, computers without a mouse and keyboard will gain popularity and will surely dominate the one's with mouse and keyboard.