As iPad Grows, PC Replacement Cycle Slows

PC market growth has been decelerating for some time now and will continue to do so for some time to come. That’s the word from Barclays Capital’s hardware analyst Ben Reitzes, who says that there’s no end in sight to the PC market’s slow decline.

Why? As the use case for tablets and smartphones grows, particularly in enterprise and education, those devices are beginning to eclipse the PC. And in doing so, they’re extending the PC replacement cycle.

“We believe a new generation of consumers and IT workers are figuring out how to compute differently than those that started using PCs in the 90’s — relying more on mobile devices and the cloud — as PCs see significant ‘task infringement’ by the day,” Reitzes theorizes. “After years of denial, most PC industry players still don’t seem to realize what is happening — and don’t have contingency plans.”

And they really should. Because, according to Reitzes, those 350-million-units-shipped years are coming to an end. And quickly, too. He figures that, in a few years, the PC replacement cycle will be a year or two longer than it is now, resulting in a significant drop in shipments — a loss of 50 million to 100 million units in annualized demand by 2015.

That’s a dramatic decline, but one that’s not without its upside.

Tablet makers, for example, stand to benefit quite a bit from the PC industry’s misfortune. Reitzes expects 182 million tablets to be sold in 2013 — up from his prior estimate of 146 million. By 2015, he expects that number to hit 268 million.

And by 2016? An even 300 million.

And in each of those years Reitzes expects the iPad to account for the majority of tablet sales: 61 percent in 2013 and 2014, 60 percent in 2015, and 59 percent in 2016. “We believe that Apple will continue to gain share and be one of the main beneficiaries of the market move toward mobile devices,” Reitzes concluded. “Even with near-term margin pressures, Apple should still generate a disproportionate share of profit in computing over the long-term.”