Grim forecast for computer, tablet sales takes a turn for the worse

A glut of inventory, Microsoft's offer for free upgrades to Windows 10 and an overall stagnant market combine for a projected decline in sales.

Roger Cheng Former Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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Roger Cheng
3 min read

Hybrid laptops like the Lenovo Yoga line represents the one bright spot in the PC and tablet businesses. James Martin/CNET

When was the last time you were excited about a tablet or PC?

That's an enduring question the consumer electronics industry has to grapple with, and the news isn't getting any better: Research firm IDC on Wednesday forecast that sales of both products will fall faster than previously expected. PC shipments are expected to tumble 8.7 percent this year, and won't stabilize until 2017. Tablets, meanwhile, will see an 8 percent decline in shipments.

The sobering forecast underscores a broader problem in the industry: an overall lack of excitement and enthusiasm in either the tablet or PC markets. Consumers are hanging onto their old PCs and tablets longer -- and why not? There have been few innovations in the tablet business to drive a new purchase, and the 3-year-old Window 8 software for laptops and desktops was never much of a lure. Microsoft's decision to offer free upgrades to its new Windows 10 software, which debuted in late July, meant most consumers didn't need a new device to take advantage of its latest bells and whistles.

The PC business has struggled for years as consumers and businesses spent their money elsewhere, including smartphones. But the market has also been beset by a glut of inventory, a lack of new models and a spike in the currency exchange rate that made the devices even pricier. As a result, IDC said it sees the market slowing further next year before showing a "modest recovery" in 2017.

By then, a new wave of products and the end of the free Windows 10 upgrade should help to bolster sales. Microsoft's move to go back to its roots with Windows 10 and de-emphasize the touchscreen may spur renewed interest in the familiar PC, said IDC analyst Jay Chou.

Microsoft said Wednesday that Windows 10 has now been installed on 75 million devices.

Tablets, meanwhile, have hit a wall as businesses have stood off from embracing them. Even Apple isn't immune; its iPad has seen six consecutive quarterly declines in shipments. While tablets were the hot market just a few years ago, interest has waned with the industry offering few reasons to upgrade. Apple's biggest innovations have been to make the iPad slightly thinner and lighter. Samsung, which previously held splashy events to launch its Galaxy tablets, now quietly announces them with an emailed press release.

Businesses have been reluctant to adopt tablets because it's not clear what value they bring. In addition, IDC said it expects the average selling price of tablets to fall thanks to the proliferation of low-cost tablets running Google's Android software.

Hope for the future?

There has been one bright spot. Hybrid devices that combine the touchscreen of a tablet but the capabilities of a full PC -- also known as 2-in-1 devices -- have surged in popularity. The mashup of these two categories may prove to be the future for both markets, a turnaround from a just a few years ago.

"In the past, the biggest challenges with 2-in-1 devices were high price points, less than appealing designs, and, quite frankly, lack of demand for Windows 8," said IDC analyst Ryan Reith.

That's changed. IDC said it expects sales of 2-in-1 devices to grow 86.5 percent to 14.7 million units shipped in 2015, though that isn't enough to slow the broader decline in the tablet business.

Apple could likewise provide a shot in the arm for the market if, as rumored, it unveils a larger iPad meant for businesses. Windows 10 is also better suited for a 2-in-1 device, according to IDC, which calls for a flurry of launches in the coming months.

IDC expects the industry to ship a total of 212 million tablets and 281.6 million PCs this year.