Deutsche Bank is cutting its estimates for PC growth, attributing part of the pessimism to the upcoming 64-bit iPad's penetration of the coveted corporate market in the coming years.
Estimates for 2013 and 2014 PC shipments have been cut to negative 10 percent and negative 8 percent year-to-year, respectively, from previous estimates of negative 8 percent and negative 6 percent, wrote Chris Whitmore of Deutsche Bank Equity Research in a note to investors on Monday.
Here's an excerpt from the note.
We...expect growing [desktop] virtualization and iPad deployments in the enterprise to pressure corporate PC sales through 2014-15...We expect AAPL's [Apple's] iPad refresh to include 64 bit architecture, which should enable a greater array of enterprise App development and facilitate greater enterprise penetration over time.
In the near term, back to school PC demand appears relatively soft and recent new hardware releases (Haswell) had little impact spurring incremental demand. Furthermore, we believe the corporate upgrade cycle will peak in [second half of calendar year 2013] as corporates complete Win 7 transitions ahead of Microsoft's ending support of XP in early 2014.
Whitmore is referring to the expectation that the upcoming iPad 5 and future versions of the iPad Mini will get Apple's 64-bit A7 processor.
And tablets overall will continue to erode PC market share, Whitmore said, adding that demand for Windows 8 back-to-school PCs "appears tepid, at best."
So, how will the PC crowd counter Apple and Android tablets? Ultrabooks priced more like tablets.
"Heading into the holidays, we expect PC vendors to increasingly position Win 8 ultrabooks against tablets on an ASP [average selling price] basis (i.e. <$500 ultrabooks)," he wrote.
But selling sub-$500 ultrabooks means profitability challenges. "We expect [sub-$500 ultrabooks] to create additional PC ASP & profitability headwinds."
Not coincidentally, new Windows 8.1 ultrabooks are being marketed as tablet-laptop hybrids that offer the best of both worlds. More traditional clamshell ultrabooks are coming with touch screens too.