I’ve long advocated the clamshell laptop computer form factor as representing the optimum logical solution for most users to what will always be a compromise. The classic laptop can be a self-contained mobile computer by virtue of its internal battery power, but also serve admirably in desktop substitute mode, at a static workstation connected to an external keyboard and pointing device(s), either with a stand lifting its built-in display to ergonomically correct elevation, or driving a large desktop monitor.
I use my laptops both ways, at my office desktop workstation connected to several USB hubs and an array of peripherals, and in self-contained mode when I go mobile. This has worked for me for the more than 15 years since I bought my first PowerBook. However, over the past 19 months, an iPad has also entered the equation, and it’s become clear that the work flow homeostasis I’ve developed over a decade and a half has been permanently disrupted — not necessarily for the worse.
Nevertheless, I remain a consummate laptop enthusiast. I like my iPad and indeed have become addicted to it, but I love my MacBook and PowerBooks. So I’m increasingly concerned about the clamshell laptop’s continued survival in the market.
Over the past couple of weeks, a raft of market research data released is indicating that the clamshell laptop, while not exactly circling the drain, has fallen on hard times, with my personal workflow ecosystem far from all that’s being seriously disrupted by an avalanche of touch devices and technology. In both China and North America, Apple’s two largest markets, tablet PC shipments surpassed notebook PC shipments in 2012.
NPD Group reports that despite much hype and hope regarding last fall’s Windows 8 launch, Microsoft’s new operating system did little to boost 2012 holiday sales or improve a year-long Windows notebook sales decline. Windows notebook holiday unit sales dropped 11 percent, with Average Selling Prices (ASPs) rising only $2 to $420. Touchscreen notebooks accounted for 4.5 percent of Windows 8 sales with ASPs around $700. Sales of Windows notebooks under $500 fell by 16 percent while notebooks priced above $500 increased 4 percent. Even Apple Macbook sales, which heretofore had resisted the sales downdraft afflicting the PC sector, dropped 6 percent, although more positively for Apple MacBook ASPs rose almost $100 to $1419 — presumably buoyed by introduction of relatively pricy new 15-inch and 13-inch MacBook Pros with Retina displays in June and October respectively.
According to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker, worldwide PC shipments totaled 89.8 million units in the fourth quarter of 2012 (4Q12), down 6.4 percent compared to the same quarter in 2011 and worse than the forecasted decline of 4.4 percent, with the Windows 8 launch providing no quick boost to recently sluggish PC demand, and the PC market continuing to take a back seat to competing devices and sustained economic woes. As a result, the fourth quarter of 2012 marked the first time in more than five years that the PC market suffered a year-on-year decline during the holiday season. Consumers as well as PC vendors and distribution channels continued to be diverted from PC sales by ongoing demand for tablets and smartphones. In addition, questions about the use of touch on Windows PCs vs.tablets slowed commercial spending on PCs.
As is usual Gartner Group analysts have come up with slightly different preliminary results numbers, estimating worldwide PC shipments totalling 90.3 million units in Q4 2012, a 4.9 percent year-over-year decline from the fourth quarter of 2011, and deducing that the PC industry’s problems point to something beyond a weak economy — and more a “structural PC market shift”
“Tablets have dramatically changed the device landscape for PCs, not so much by ‘cannibalizing’ PC sales, but by causing PC users to shift consumption to tablets rather than replacing older PCs,” says Mikako Kitagawa, principal analyst at Gartner. “Whereas as once we imagined a world in which individual users would have both a PC and a tablet as personal devices, we increasingly suspect that most individuals will shift consumption activity to a personal tablet, and perform creative and administrative tasks on a shared PC. There will be some individuals who retain both, but we believe they will be exception and not the norm. Therefore, we hypothesize that buyers will not replace secondary PCs in the household, instead allowing them to age out and shifting consumption to a tablet.”
“This transformation was triggered by the availability of compelling low-cost tablets in 2012, and will continue until the installed base of PCs declines to accommodate tablets as the primary consumption device,” Ms. Kitagawa said. “On the positive side for vendors, the disenfranchised PCs are those with lighter configurations, which mean that we should see an increase in PC average selling prices (ASPs) as users replace machines used for richer applications, rather than for consumption…. Our early research indicates that there was good growth in professional PC sales.”
NPD DisplaySearch’s Quarterly Mobile PC Shipment and Forecast Report predicts that tablet PC shipments are expected to reach more than 240 million units worldwide in 2013, easily exceeding 207 million notebook PCs that are projected to ship this year. In a market that has been heretofore dominated by one major player, Apple, shifting market dynamics are creating the opportunity for a greater variety of choices, which NPD predicts will drive shipment growth in 2013 to 64% year-over-year.
The report notes that rapid development and adoption of new screen sizes is allowing both large and small brands to gain market traction in all regions and create new demand for tablet PCs. The tablet market has been led by Apple’s 9.7-inch iPad, but in 2013 a new class of small tablets will take over the market. Tablet PCs with 7-8-inch screen sizes are expected to account for 45%, or 108 million units of the market in 2013, overtaking the 9.7-inch size which will account for 17% share, or about 41 million units.
At this point so-called “phablets” — extra-large screened smartphones — are an as yet unknown quantity in terms of sales potential and to what degree they will cannibalize smaller tablet sales.
Quartz’s Christopher Mims reported last week that project analysts at Barclays maintaining that phablets will soon eclipse all other mobile device categories in adoption growth rate, predicting that the pace of phablet sales growth will expand by 70 percent in each of the next three years, and the category becoming a $135 billion market by the end of 2015 — Barclays projecting 142 million unit sales in 2013 with volume rising to as great as 402 million by 2015. That would certainly shake things up in the tablet and notebook PC market.
The outlook for laptop computers is even bleaker. In Canalys’ latest forecasts, which predict the Wintel PC market share set to fall to 65 percent in 2013. Canals also notes that combined shipments of desktops, netbooks and notebooks showed a year-on-year decline of around 10% in the fourth quarter of 2012, as consumers flocked towards Android and iOS tablets over Wintel-based PCs. Canalys analysts expect that Microsoft and Intel will suffer further, with the Wintel PC market share expected to decline from 72 percent in 2012 to 65 percent in 2013. That would represent a five percent decline in unit shipments, largely due to the poor outlook for notebook sales. “Pads and, increasingly, smartphones can perform many of the day-to-day computing tasks that most people require,” says Canalys Research Analyst Pin-Chen Tang, “Wintel PCs are becoming less likely as an individual’s first choice of computing device for everyday tasks, such as sending email or web browsing.”
“The launch of Windows 8 did not reinvigorate the market in 2012, and is expected to have a negative effect as we move into 2013. Windows 8 is so different to previous versions that most consumers will be put off by the thought of having to learn a new OS,” comments Canalys Research Analyst Tom Evans. “An additional barrier is the potential increase in cost that Windows 8 brings, as it is perceived that a PC with a touch-screen is needed to get the best user experience. In the current economic climate, this will be enough to make people delay purchases as they wait for prices to fall.”
“The combination of Windows 8 and Ultrabooks has been the catalyst for notebook form-factor innovation, but what was becoming a routine purchase is now more complex,” observes Canalys Analyst Tim Coulling. “Now buyers must decide between an Ultrabook and a standard notebook, a touch-screen and a non-touch-screen, as well as an increasing array of form-factors, such as clamshell, convertible and hybrid. This added complexity will make purchases more considered and lengthen the sales process.”
Canalys predicts that from 2014 to 2016 the PC industry will see a shift in form-factor mix, as consumers in both mature and high-growth markets become interested in new PC designs based on touch-screens. Canalys expects the tablet market will grow by 37% on average each year between 2012 and 2016, with volumes reaching 389 million units, accounting for 59% of total PC shipments. This growth will be driven by the iPad and iPad mini, low-cost, content-subsidized Android products, and Windows-based hybrid PCs (eg, Microsoft’s Surface Pro). The hybrid form-factor adds value to pads, enabling a greater level of productivity. This, combined with the expected improvements in Android and iOS, will further encourage the shift from notebooks to pads.
‘It is clear that Microsoft is now pushing touch as the primary input method for Windows, but keyboard and mouse are still needed for legacy applications,’ adds Coulling. ‘Following the launch of the iPhone, the shift from keypad/keyboard to touch input on smart phones was rapid. The popularity of pads and the inevitable decline in touch-panel prices will cause the same trend to emerge in the PC market.”
While Apple has benefited mightily thanks to the shift from keypad/keyboard to touch input, a shift it is substantially responsible for in terms of the iPad’s success. Indeed, Fortune’s Philip Elmer-DeWitt observes that before he died, Steve Jobs launched Apple on a multiyear effort to disrupt the PC industry — including its own personal computer business — with smartphones and tablet computers, so if the iPad was to fulfill its promise, Mac sales should go down.
However, with touchscreen support having become a major feature trend in the Wintel PC laptop category, Apple has no touchscreen laptops at all, nor has there been any indication, even the form of rumors, of plans to develop one. Of course Microsoft has pretty much forced the touch support issue om PC makers by rendering Windows 8 machines partly crippled without it, and while Apple might argue that no such limitation is imposed by OS X, it can be assumed that an increasing default inference of consumers that a laptop can’t be considered fully-equipped without a touchscreen. Touchscreen support in laptops has also proved a catalyst for development of convertible devices like Lenovo’s IdeaPad Yoga Convertible Ultrabook that combine laptop and tablet functionality in a single machine.
It’s glaringly clear that like it or not, touch technology is going to figure prominently in personal computer development in the near to mid term future, with the traditional”digital hub” era laptop an endangered species. The new nexus of the digital universe has in effect shifted to the Cloud. I’m guessing that the late 2008 form factor MacBook Pro models still available from Apple will be the company’s last-ever classic laptops with conventional spinning electromechanical hard disk drives, internal optical drives, expandable RAM, and a relatively comprehensive range of legacy I/O connectivity (eg: Ethernet and FireWire). If that sort of machine still appeals to you (it does to me), it’s probably time to grab one soon, because I don’t expect they’ll still be available by the end of this year.
Looking ahead, we can hope that the tablet computer experience can substantially improve for content producers and others who mainly use their computers for work rather than for entertainment. Microsoft’s Surface tablet PC remains a theoretically appealing concept to me, and I wish Apple could be persuaded to build an OS X iPad with USB connectivity. Not holding my breath waiting for that, but one can always hope.