PC market suffers worst-ever quarterly drop - three factors behind the fall

Worldwide PC shipments totaled 76.3 million units in the first quarter of 2013 (1Q13), down -13.9% compared to the same quarter in 2012 and worse than the forecast decline of -7.7%, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker.

The extent of the year-on-year contraction marked the worst quarter since IDC began tracking the PC market by quarter in 1994.

The results also marked the fourth consecutive quarter of year-on-year shipment declines.

Despite some mild improvement in the economic environment and some new PC models offering Windows 8, PC shipments were down significantly across all regions compared to a year ago.

Fading mini notebook shipments have taken a big chunk out of the low-end market while tablets and smartphones continue to divert consumer spending. PC industry efforts to offer touch capabilities and ultraslim systems have been hampered by traditional barriers of price and component supply, as well as a weak reception for Windows 8.

The PC industry is struggling to identify innovations that differentiate PCs from other products and inspire consumers to buy, and instead is meeting significant resistance to changes perceived as cumbersome or costly, IDC says.

Windows 8 failed to provide positive boost
"At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," says IDC analyst Bob O'Donnell.

"While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices. Microsoft will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market."

Restructuring hurts HP, Dell
The impact of slow demand has been magnified by the restructuring and reorganizing efforts impacting HP and Dell.

China's Lenovo (which bought IBM's PC business) remains a notable exception as it continues to execute on a solid "attack" strategy. 

Tablet market booms
It's no secret that personal computing overall is still booming - it's just that budgets are shifting from laptops to tablets (and it's worth noting there that Windows 8, although pinned for sluggished PC sales, is also appearing on Microsoft's Surface, as well as Windows 8 tablets recently released by HP, Lenovo, Dell, Asus and Acer).

However, the PC market is falling away faster than IDC and other market trackers expected.

At the same time, tablet shipments are picking up faster than expected.

IDC recently revised its 2013 forecast for the worldwide tablet market to 190.9 million, up from its previous forecast of 172.4 million units.

It now predicts an average increase of 11% between 2013 and 2016, with tablet shipments upwards of 350 million by the end of 2017.