PCs 'could decline for years,' analyst warns in cutting outlook

Barclays Capital analyst issues a downward revision for the sector, blaming surging interest in tablets and Windows 8 confusion for the move.

Consumer interest in mobile devices will hurt PC sales for years to come, one analysts predicts. Karyne Levy

It's no secret that the PC market is in trouble, but its future appears to be dimmer than previously thought.

Warning that sales of "PCs could decline for many years to come," Barclays Capital's hardware analyst Ben Reitzes cut his outlook for the sector through 2016. Reitzes blamed a variety of factors for the expected decline, including surging interest in tablets and confusion over Microsoft's recently released Windows 8.

"We are lowering our 2012-2016 PC forecasts due to weak macro conditions, confusion around Windows 8, ongoing cannibalization from tablets, and an elongation in replacement cycles," Reitzes wrote in a research note yesterday, according to Forbes.

Reitzes blamed a myopic PC industry for not recognizing and adjusting to consumers' shifting tastes to mobile devices, according to the report seen by Barrons:

We believe a new generation of consumers and IT workers are figuring out how to compute differently than those that started using PC's in the 90's - relying more on mobile devices and the cloud - as PC's see significant "task infringement" by the day. As a result, it can no longer be assumed that the PC market can remain in the range of 350 million units a year - and we argue that the PC replacement cycle is in the process of being elongated by 1-2 years, resulting in the loss of 50-100 million units in annualized demand by 2015. After years of denial, most PC industry players still don't seem to realize what is happening - and don't have contingency plans.

Reitzes cut his 2012 forecast for PC units sold to 352.75 million units, down 3 percent as well as his 2013 prediction to 338.34 million, a 4 percent decline from his previous forecast.

Tablets are expected to reap the benefit of PCs' decline, with Reitzes raising his estimates for the market, predicting 182 million units in 2013 compared to his previous estimate of 146 million, and 230 million in 2014, a dramatic increase over his prior 139 million estimate.

While Reitzes expects Apple to control the majority of the tablet market at least through 2016, he said Google, Samsung, and Amazon "have the ability to expand the non-Apple market quite a bit and we believe these 3 companies can sustain 30-40% share of the market (combined) over the longer term."

Reitzes' dire prediction comes on the heels of market researchers' data showing that PC sector "withdrew sharply" in the third quarter, with shipments falling more than 8 percent from the prior year.

 

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