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3 Signs That the Personal Computer Market Is Rebooting


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Woman Stands Holding a File of Documents in an Office Full of Computers at Night
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Following the introduction of Apple's (AAPL) instantly popular iPad line of tablets in 2010, many believed computing would switch, if not entirely, then largely to mobile devices. And for a while, statistics seemed to bear this out. According to IT market researcher IDC, from late 2010 to the end of 2013, annual worldwide PC shipments dropped by 12 percent.

But the death of the personal computer, it seems, has been greatly exaggerated. The latest numbers indicate that the PC decline could be leveling off. And other indications show that the dowdy old PC might not be headed for irrelevance after all. Here are three developments indicating otherwise.

Shipments Are Starting to Flow Again

The years of decline were then; this is now. Preliminary research from Gartner Group (IT) indicates that worldwide PC shipments inched up by 0.1 percent on a year-over-year basis in this year's second quarter following eight straight quarters of declines.

It's a small number, but it masks some impressive gains. In the U.S. market, the tally was much higher at 7.4 percent, while the Europe, Middle East and Africa mega-region saw an 8.6 percent improvement. It was the Asia-Pacific region that dragged the overall number down, recording a 9.5 percent year-over-year fall.

Asia-Pacific aside, the improvement is due to a number of factors. First is the accessibility of new and attractive hardware, with thin, powerful notebooks doing well and touchscreen models dropping to affordable prices.

On the software side of the equation, in April, Microsoft (MSFT) stopped supporting its creaky old Windows XP operating system.

This has given users of aging PCs running the OS a strong incentive to upgrade. And a great many of them spent a little more to buy new machines prepackaged with the company's current Windows 8.1 rather than undergoing cumbersome software updates.

Industry Veterans Are Getting Their Due

When the sales declines started to snowball, many big names in the PC space dreamed of escaping the segment altogether.

One was Hewlett-Packard (HPQ), which in 2011 revealed it was considering a spinoff of its PC business. Meanwhile, that year Intel (INTC) -- maker of the chips that power a great many of the world's PCs -- was at the beginning of a cycle that would see its top line decline over three consecutive years.

HP never did let that unit go, which in retrospect looks like a smart call. In the IT giant's most recently reported quarter, its overall revenue was slightly down on a year-over-year basis. Not so the tally for personal systems (essentially its devices business), which advanced by 7 percent to $8.2 billion.

Personal systems is HP's largest division in terms of sales.

This was due in no small part to sales of desktop PCs and notebooks, which both grew by 6 percent. Personal systems, by the way, is HP's largest division in terms of sales.

Intel, which in spite of its efforts at diversification is still strongly tied to the PC market, showed an 8 percent year-over-year gain in top line (to $13.8 billion) in its most recent quarter. Much of this increase came from the firm's core PC client group, which was responsible for nearly 60 percent of that total.

Here at home, HP's 7 percent bump was eclipsed by the recently taken private Dell's approximately 13 percent growth. Then there's the global market leader, China's Lenovo (LNVGY), which enjoyed a fat rise of roughly 15 percent.

Even Apple Experienced a Growth Bump

Even one of the most prominent players in mobile hardware is cashing in its chips on PCs. Apple's portable gadgets might get the visibility and the buzz, but in the firm's most recent quarter, it was computers that won the growth contest.

The company's Mac line saw an 18 percent annual rise in terms of units sold and a 13 percent increase in terms of net sales. Both figures trumped the growth in iPhones, iPads and iPods.

In fact, when looking at Apple's four main product lines, the Mac was one of only two (along with the iPhone) to record an increase in unit sales across the most recent three- and nine-month periods.

Macs are helping Apple pump out the profits ($7.7 billion in net income for the most recent quarter, on $37.4 billion in sales). They're also providing they're share of cash to fund the company's dividend, an unusual feature for a tech company stock.

Like a Phoenix

The gains in the PC market are healthy and encouraging -- and if current trends continue, they're also likely sustainable. All that's to say that things are looking pretty good for a technology that was written off by the skeptics not so long ago.

Motley Fool contributor Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Apple, Gartner and Intel, and it owns shares of Apple, Intel and Microsoft. Try any of our newsletter services free for 30 days.


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