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Rebooting The PC Industry: Tablets Force A Shift

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Intel and its PC manufacturing customers are hustling to adapt.

Intel, for example, is working on chips that are less power-hungry so that they’re more useful in battery dependent mobile devices. The company says it has signed deals for some 35 different tablet and tablet-PC hybrids to use its chips. Intel is pursuing the smartphone market, which until now has been controlled by a competing chip design developed by U.K.-based ARM Holdings PLC.

Intel, a linchpin in the creation of the PC market, has experimented with putting its chips into non-PC devices before, only to retreat under pressure to focus on its core business. Now investors’ interest has flipped, and Intel finds itself under pressure to move faster into smartphone and tablets.

The message isn’t lost on the company: The bulk of Otellini’s recent sales pitch to investors centered on Intel’s efforts to expand into the new technologies.

The consequences for not failing to act have already been severe. AMD’s board forced out CEO Dirk Meyer in January, largely because the chipmaker lacked a defined mobile strategy. The company is still without a permanent CEO.

The corporate hand-wringing, analysts say, shows the magnitude of the industry’s transformation.

“These changes are a fundamental shift in computing behavior,” said Forrester’s Epps, noting that computing is now an always-on activity. “The main shift for PC companies that will survive is they need to shift their focus from computers (as) the device to computing (as) the behavior.”

Many PC makers such as Hewlett-Packard Co., Dell Inc. and Lenovo Group Ltd. have responded by designing tablets of their own.

None of the new tablets have become a sensation like the iPad, which has sold nearly 29 million units since it went on sale in April 2010. On Tuesday, Apple said that in the latest quarter, it sold about five times as many iPhones as it does Mac computers. It sold more than twice as many iPads as Macs.

“If you have a tablet, you don’t turn on the PC as much,” said Brian White, a Ticonderoga Securities analyst who covers the PC industry. “If you have a tablet, you may not bring your notebook on a trip. It’s only going to get stronger, and tablets are going to get better and better. This is a legitimate threat to a PC maker. They have to have both, and unfortunately most are behind in the game.”

Even if current market projections become a reality, there still would be a wide gulf between the $35 billion tablet market and the $250 billion PC market. The PC won’t become obsolete any time soon because it’s still the device of choice for creating the content that consumers increasingly access with their smartphones and tablets. At least for now, PCs are also needed to store data and to load information onto smaller devices.

How much of the computer market it will be able to command in the future, however, is an open question.

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Posted by FanningCommunications on Sep 1st, 2011 and filed under Literature & Electronic. You can follow any responses to this entry through the RSS 2.0. You can leave a response by filling following comment form or trackback to this entry from your site

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