Will 2014 Be the Year of the PC?

Before you go, we thought you'd like these...
Before you go close icon

With worldwide PC shipments declining 10.9% year over year in the second quarter, marking the fifth consecutive quarter of decline, it seems as if the PC market has one foot planted in the grave. Given that mobile computing devices tend to be more affordable, almost as functional, and a lot more portable than their PC counterparts, the "death of the PC" storyline has legs. Not only have these factors supported the explosive rise of mobile computing, which has eaten into PC sales, they've also put pricing pressure on the PC itself. But before you go and sound the PC's death knell, you may want to wait to see what 2014 has in store for the PC.

Mr. Softy's strong arm
Thanks to the forceful hand of Microsoft , the PC market will likely soon find support from U.S enterprise customers. Come April of next year, Microsoft will be abandoning support for the enterprise favorite, Windows XP. According to CLSA, 35% to 40% of all businesses are still running the soon-to-be 12-year-old Windows XP. With the April deadline quickly approaching, we're starting to see sales pick up in the U.S. market. In fact, the U.S. was the only bright spot of Gartner's dismal second quarter update. U.S. PC shipments only declined by 1.4% year over year, grew by 8.5% sequentially, and enterprises were the driving force of improvement.

According to Microsoft, the average time it takes an enterprise to fully migrate between operating systems ranges anywhere from 18 to 32 months. Since we're only just starting to see evidence of migratory behavior, it's likely that next few quarters of U.S. PC shipments could remain strong on a relative basis. If this were to be the case, it would support the notion that enterprises have been putting off migrating for as long as possible and are finally stepping up to the plate.

An aging fleet
According to Intel , there are over 500 million PCs that are four years old or older, and about 322 million PCs are expected to ship this year. The billion-dollar question is if said users will opt for another PC, or they've already embraced the mobile computing revolution and won't be looking back. The hope is that Intel's next-generation of cutting-edge processors will persuade these users to upgrade their aging PCs over the next year.

Of all of Intel's upcoming processors, Bay Trail gives the PC industry the greatest hope of a near-term resurgence. Positioned primarily as a tablet processor available this holiday season, Bay Trail will accommodate a myriad of affordable of portable computing devices capable of running the full version of Windows 8. Devices are expected to start in the $200 to $300 range, depending if you opt for a touchscreen. Between price and how Bay Trail smoked the quad-core competition, the chances are high that Intel's upcoming processor will be a hit among everyday users. Additionally, Bay Trail will allow PC makers to tap into the high-growth tablet segment, giving them an opportunity to expand their addressable markets.

Superior genes
Despite playing catch-up against ARM Holdings for the first four years of the mobile computing revolution, Intel may have a competitive edge going forward. That's because Intel's x86 chip architecture brings the added benefit of backwards compatibility, giving Intel-powered devices the ability to access legacy Windows applications. Consequently, the sea of low-cost Google Android tablets may lose some of their appeal against upcoming low-cost Wintel powered devices.

Plenty of fight left
Thanks to pent-up demand, compelling processor technology, and a little help from our old pal, Mr. Softy, 2014 may prove to be the year of the PC. Between these factors, I think we'll begin to see an improvement in PC shipments over the coming quarters. The billion-dollar question is if it's temporary, or it's the start of a shift back toward the PC side of things. I suppose the answer depends on just how strong the structural shift is to mobile computing and if Intel has given PC makers the right tools to excite users again.

Survival of the fittest
Truth be told, the PC never intended to compete against the tablet, and it took Intel over four years to become competitive against the ARM competition. The moral of the story? Evolution takes time, and so much of our technological lives are shaped by just a handful of companies. To help investors get a better sense of what company is on top, The Motley Fool has published a special free report that details the five most influential technology companies of our time. For those that want to be in the know, click here to keep reading.

The article Will 2014 Be the Year of the PC? originally appeared on Fool.com.

Fool contributor Steve Heller owns shares of Google and Intel. The Motley Fool recommends Gartner, Google, and Intel. The Motley Fool owns shares of Google, Intel, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading