Did you hear that the desktop PC is dead? Well, d'oh!
Except that it isn’t really dead. It has just morphed into a smaller, sleeker, portable device. That device—a fully functional personal computer that is light enough to tote around—has gone under many names since some marketing ace decided that “laptop” was just too old hat, implying a thing that hadn’t quite evolved.
The Gartner Group has now dubbed it the “ultramobile.”
Whatever you call it, it doesn’t take a ton of research to conclude that most people will prefer a true workhorse PC that is portable, for personal or professional use, to one that isn’t. It is now technically feasible to build it. What’s not to like?
As an investor, nothing, if you expect that the ultramobile device will take the place of the desktop personal computer in a range of computing devices that now also includes the tablet PC and the smartphone.
That hasn’t happened yet. The first ultramobile models were introduced more than a year ago, but they have barely registered on the consumer wavelength as an option. During the same period, tablets took hold as the primary device for consumers and business users who never really needed or used the full functionality of a PC.
The ultramobile should stake a claim in the long-awaited workplace PC replacement cycle, except we’re still awaiting that, too. If the desktop PC is dead, something has to replace it as the workhorse productivity tool, and it’s not going to be a smartphone or a tablet.
Gartner Group offers an optimistic forecast going forward. Its latest prediction
is that worldwide sales of all of the above devices—personal computers, tablets and smartphones—will increase 9% this year, to 2.4 billion units. In sheer numbers, projecting out through 2017, Gartner expects mobile phones to continue to dominate, while traditional PCs, including the ill-fated notebook category, decline and tablet sales increase sharply.
But in the same period, its analysis sees sales in the ultramobile category growing exponentially, from fewer than 10 million in 2012 to more than 23 million this year, and 96 million by 2017.
That means good news and bad news for Microsoft
(NASDAQ:MSFT), creator of the Windows operating system that overwhelmingly dominated the desktop era but already comes in second to Google's
(NASDAQ:GOOG) Android system when all three categories of devices are considered. Gartner expects that trend to continue, with Android ending 2017 with overall sales more than double that of Windows.
Whoa! Is Microsoft dead, too? No. Remember, that figure includes smartphones, the largest category by a big margin and one that is dominated by the Android operating system. Both companies will still be ahead of Apple
(NASDAQ:AAPL) in terms of sheer sales numbers, which nicely illustrates the fact that volume doesn’t matter as much as profit margin. And overall, sales of the workhorses—ultramobile and desktop combined—are seen rising by 5% by 2017.
Whatever you read to the contrary, nobody knows whether Microsoft’s radically new Windows 8 operating system will be a slowly building success story or an utter disaster. Investors in both Google and Apple obviously are expecting and rooting for the latter.
At this point, all of this is seen as bad news for PC vendors and PC manufacturers. And it is, at least for the short term.
But in the long term, some of those companies will successfully make the transition from seller of desktop PCs to seller of ultramobiles, no matter which operating system succeeds or fails.
Who might that be? Intel
(NASDAQ:INTC) is certainly a name to watch. Gartner had to invent the name “ultramobile” because Intel trademarked the name “ultrabook” to identify and market mobile computers that use its newest line of chips, which are designed to carry the power of a desktop in a lighter mobile size.
One important point here is that Intel has said that it expects to have ultrabooks on the shelves
starting at $599 by late 2013. That’s a huge advantage over the early models, which are priced at around $900-$1,000, making them an unlikely pick for any consumer or business professional who can get along with a tablet’s more limited functionality, or delay replacing an older PC.
Intel’s advantage is that it wins if any manufacturer succeeds with an ultrabook, among the many who are trying.
As quarterly earnings start flowing in, there is little hope that we’ll get a better idea of which brands are actually beginning to gain traction with consumers. Expectations are rock bottom for all of them for many reasons, key among them the wariness about Windows 8, the high price of current models, and the generally lousy economy.
We can pretty much write off Dell
(NASDAQ:DELL) in advance. The company is expected to go private soon, in order to struggle with that transition outside the harsh glare of the stock market.
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