Is the PC Dead?

Throughout earnings season, and onward, a question has been running through my head: Is the PC dead?

You heard about the death of the PC from declining earnings at chipmakers Intel (NAS: INTC) and AMD. Computer makers Hewlett-Packard (NYS: HPQ) and Dell (NAS: DELL) haven't shown any signs of hope. Even Microsoft (NAS: MSFT) disappointed investors with its earnings report.

Meanwhile, sales of tablets and smartphones continue to set records. A new lineup from Apple (NAS: AAPL) along with solid tablets offerings from Amazonand Google won't help matters.

But before we call the PC dead, let's keep a few things in mind.

We've been through this before
This isn't the first time we've called for the death of the traditional PC. I remember when tiny network computers were supposed to replace PCs in the workplace nearly a decade ago. That fad didn't last long. Then there was the netbook phase of tiny laptops that had plenty of power to do the work most people needed done. A lot of squinty eyes later, the netbook is all but dead.

These two devices were supposed to change computing the way we knew it, and they failed to upend the industry. So is the tablet different? In some ways, it really is.

Instead of beginning as a business tool the way netbooks and network computers did, the tablet started as a toy or a luxury. The iPad gained popularity as a home gadget that was convenient and portable. For some businesses, it made operations or presentations easier, but it was an add-on to the PC for the most part, not a replacement.

That's beginning to change with Windows 8 and the Surface keyboard, but it's still largely true. The tablet won't replace the PC unless it adds capabilities users need, like a keyboard and mouse. If it did that, it would just be a laptop.

Refresh cycle hasn't started
There are two other factors driving slow PC sales right now. First is people waiting until a new line of PCs comes out with Windows 8. We're already starting to see new innovative features on Windows 8, and if you're in the market, why not wait a few months?

But often overlooked is the fact that PCs aren't changing nearly as quickly as they used to. I'm working on a three-year-old MacBook, and it has more than enough power for the functions I use. Eight or 10 years ago, a three-year-old computer would be a dinosaur. The replacement cycle is simply getting longer.

PCs are far from dead
If you've ever tried to write a paper or work in a spreadsheet on a tablet, you know that some functions simply can't be beat on a desktop or laptop. They're built for word processing and more complex tasks than a tablet. The PC won't die quickly because tablets simply can't offer the same capabilities.

It's also important to keep PC numbers in perspective. Slash Gear predicts that PC sales will fall 1.2% to 348.7 million units. That's still an astounding number of PCs, and even if sales fell 1.2% for 10 years, the industry would sell a lot of PCs. Numbers like this don't sound like death to me.

A merger is more likely
What I think is more likely is a merger or morphing of the PC market much like we saw with laptops. Tablets will eventually become an extension of the PC. Windows 8 is taking steps in this direction for Windows users, and the Apple cloud is beginning to make strides in this respect as well. Lenovo has also introduced a laptop/tablet combo that may provide a peak into the future.

We're in a bump in the road for PC makers, chip companies, and Microsoft, but we're far from the demise of the PC as we know it.

A buying opportunity?
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The article Is the PC Dead? originally appeared on Fool.com.

Fool contributor Travis Hoium is short Amazon.com and manages an account that owns shares of Intel and Microsoft. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool owns shares of Apple, Amazon.com, Dell, Google, Intel, and Microsoft. Motley Fool newsletter services recommend Apple, Amazon.com, Dell, 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.

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