The News: According to market research conducted by the International Data Corporation, global shipments of personal computers (your trusty laptops and desktops) are taking the "most severe yearly contraction on record," or an astonishing 10.1% drop.
Businesses aren't taking as large a hit (just a 5% drop in demand), but consumers are expected to buy 15% fewer PCs, a massive hit to that end of the market.
Why? The culprit is twofold: One, the exploding smartphone and emerging tablet markets have seriously displaced the historic role of the PC. Two, an awful lot of consumers don't see the need to upgrade or replace their existing system, seeing as they've gotten fast enough that the average Joe doesn't need a significantly better computer.
According to senior research analyst Joe Chou, "Perhaps the chief concern for future PC demand is a lack of reasons to replace an older system."
Which might be why emerging markets, where consumers are more likely to own an older (or no) PC, consume the lion's share of next year's projected sales:
Still, growth in those areas is still declining, and the desktop PC market is expected to contract 18.5% by 2017. Portables do somewhat better, recovering from a low to an overall contraction of 8.5%.
Which makes sense. Desktops don't offer the same utility or portability as a laptop, and as technology improves, they're simply getting outcompeted. The same thing is happening to laptops with the emerging tablet market as well:
Image credit: Business Insider
Tablets aren't destroying the PC industry wholesale, but they're seriously limiting long-term growth prospects in the older industry.
"... The long-term outlook for [both consumer and commercial PC] markets is not significantly different, with a small decline projected for both consumer and commercial segments in 2014 with near flat growth in the longer term," said the report.
What's it mean? Mobile is the new growth market, and there's three key players: Google, Microsoft, and Apple, all of whom are heavily investing. Remember the 90s, when Microsoft was the indisputed king of retail computing? All three companies are looking to take the initiative and come out the victor to snatch that kind of market share, which explains, for example, why Windows 8 was a tablet-and-touchscreen oriented operating system, and why Google is developing its own lightweight ChromeOS with likely future implementation in a tablet.
It's going to be an interesting ride.