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Why the PC continues to defy expectations

Tech watcher Zeeshan Malik charts the continued resilience of the personal computer A decade ago, some of the best and brightest minds in the technology world predicted the death of the PC - gone, finished and irrelevant. With the rise of mobile technology and devices such as 3G enabled smartphones and tablet computers, it wasn’t as outrageous of a claim as PC makers would have you believe. Fast-forward to 2010 and the truth couldn’t be more different, with more than 1 million PCs sold each day around the world. When Intel’s chief executive officer Paul Otellini called the bottom of the PC sales decline late last year, the books revealed that PC sales in Asia-Pacific actually rose five percent in 2009. This starkly contrasted sales declines in cars, cell phones and televisions during the same period.

Reports from analyst firm Gartner echoed these impressive results for PC sales. “The Asia Pacific personal computer (PC) market is forecast to grow 20.3 percent in 2010, reaching 114.6 million unit shipments. Spending on PCs in Asia Pacific is forecast to grow 12.4 percent in 2010, compared to only 2.9 percent in 2009, due to a sharper decline in average selling prices for PCs in 2009.” In October 2010 Intel announced revenues exceeding $11 billion for the quarter – the highest quarterly revenue figure in Intel’s history. This has been largely due to the strength of PC demand from corporate customers in developed nations, as well as sales growth from PC adoption in emerging markets, including those in the Asia-Pacific region.

The question now is: what’s causing the PC’s resilience and growth? In a market known for turbulence and fads, why is the PC becoming more indispensible as time goes by? What are the consumer drivers making people spend big on PCs and in greater numbers?

Content creation and consumption. 

Think of one friend or associate who does not use at least one social media tool such as Facebook, Twitter, LinkedIn or YouTube: the chances are you will draw a blank. The viewing and consumption of media on the Internet has become so pervasive that the world’s number one website is none other than Facebook. When we take a look at search engines, it is startling that YouTube is now the world’s number two most frequently used search engine online. Every minute, more than 700,000 videos are being streamed and consumed from YouTube, while more than 24 hours’ worth of videos are also being uploaded at the same rate.

The need to view, consume and create media content, is a strong driver for the ongoing growth of the PC. Nearly one third of consumers worldwide now use their PCs to create music or edit photos or video, several times a week, while almost half use their PCs for playing games. In both instances, the quality of the experience is highly reliant on the performance and capability of the PC. People want to be connected to the experiences that help them realize the full potential of their digital lifestyles. While newer, alternate form factors such as tablet computers are now commonly available, people are still relying on their PCs to deliver the performance and flexibility for more intensive applications such as editing photos, shooting videos and creating online galleries - a trend that sees people shifting from merely content consumers to content creators.

Bryan Ma, Asia-Pacific Associate Vice President of analysts IDC, says: “While tablets may be a hot topic today, one thing that is commonly overlooked is that the size of the media tablet market is still significantly smaller than the PC market. In the Asia-Pacific excluding Japan region, IDC is only expecting just over 1 million media tablets to ship this year. This is compared to a much larger 34 million consumer notebooks, the latter of which is expected to grow nearly 40 percent from the previous year.

“Indeed, a PC's keyboard, applications and storage provide productivity advantages that media tablets simply weren't designed for in their consumption-focused usage model."
From this reality, it is easy to see how the PC has become indispensable for consumers everywhere. PCs are no longer nice to have devices - they have become a necessary component for everyday life.

The building blocks of nations?

 In rapidly developing nations such as China - as well as countries in South-Asia like the Philippines, Indonesia and Vietnam, the PC segment is undergoing a renaissance that is outstripping the pace of growth in developed markets. PCs are the building blocks of developing nations. They fuel the fundamental needs for computing power within educational spheres as well as many levels of industry. Says Gartner, “In China, PC shipment growth is expected to reach 22.1 percent. Government and education segments will have the most stable demand for PCs in the professional market. The government announced early this year that it will try to increase education spending to four percent of 2010 GDP and is focused on creating opportunities in schools and kindergartens using PCs.”*
The Chinese Government is also looking inward, stimulating domestic consumption to drive China's growth and relying less on export-oriented growth. The government is expecting to promote more entrepreneurship and initiatives to help small and midsize businesses become agile and productive, with the PC an integral tool in office productivity.
IDC supports this growth sentiment and predicts emerging nations in the Asia-Pacific will anchor much of the growth ahead. It predicts the region's PC sales to increase by 23.2 percent this year, on the strength of strong portable PC sales.
Gartner adds: “India’s recovering economy, which is expected to grow 8.5 percent in 2010, will be the main driver behind PC shipment growth of 19.4 percent, compared to a decline of 3.8 percent in 2009. Growth will be restored to industries most affected by the recession; spurring major hiring that will require increased PC budgets to support new employees.” There is more ‘bullishness’ witnessed among small and midsize businesses, while government and education, are the other two verticals that have increased their spending. At the same time, increasing job opportunities creates a sense of optimism and security among consumers, leading to an increase in discretionary spending.
What’s next?

 Personalization of computing will be the catalyst that continues to drive demand in PCs. To meet this consumer demand for more accessible and more affordable PCs, Intel predicts one billion CPU units will be shipped by 2015.

Intel’s answer to this innovation demand is the development of its next generation Core processor micro-architecture for PCs - codenamed ‘Sandy Bridge’ - which is on track for production by the end of this year. The chip design is going to change the way consumers view computing, particularly as the acceleration of the cloud builds out across the enterprise, government and SMB sectors.

The rapid pace of innovation and changing nature of technologies is changing the needs of consumers – from wanting to be connected to the Internet, to being connected to each other. Companies like Intel are continuously looking at innovation and constant improvements in chip design to meet these changing needs.

Because of this, the humble PC is defying all expectations. PCs are remaining resilient with sales continuing to grow despite the global turmoil of the 2009 financial crisis. As companies like Intel, Microsoft and Apple continue to lead the way in terms of PC innovation, meeting the changing needs of consumers across the world; the future looks bright for the PC industry.

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