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The PC is not dead: it's about usage not units

TMT Predictions 2013

Deloitte | TMT Predictions 2013Deloitte predicts that in 2013, more than 80 percent of Internet traffic measured in bits will continue to come from traditional desktop and laptop personal computers. In addition, more than 70 percent of the hours we spend on computing devices (PCs, smartphones and tablets) will be on a PC. Time at work accounts for a large portion of that, but even in our non-work lives we are likely to use PCs more than 50 percent of the time1 . For most people, the PC will continue to be the primary computing device. We are not in a ‘post-PC era.’  We are in the era of ‘PC Plus.’

Strong sales of tablets and smartphones have prompted some to suggest that the PC is becoming an anachronism. From 2010 to 2012, combined sales of tablets and smartphones2 have grown from over 350 million to around 1 billion units3a. This is far greater than the volume of PC sales. PC sales also grew over that period, just at a lower rate. PC sales were 350 million in 2010, 353 million in 2011 and are likely to be about 355 million units in 201233b.

So while not matching the growth of tablets and smartphones, PC sales have remained strong.  Also, the total installed base of PCs should continue to increase in 2013, albeit at a slower pace than over the past two decades.

There will likely be almost 1.6 billion PCs in use in 2013, up from 1.4 billion in 20104 . The installed base of tablets will be about a quarter of a billion in 2013, and the base of smartphones whose data capability is used on a regular basis will be more than 1.5 billion5 (For more information about smartphone usage in 2013, see 2012 Prediction: Smartphones ship a billion but usage becomes simpler) . As replacement cycles lengthen, flat or even moderately declining annual sales figures may not imply a decline in the number of PCs owned.

Why has the PC endured and why is it continuing to endure? The simple reason is that although PCs, tablets and smartphones all have processors, memory, storage, connectivity and user interfaces, each form factor has a unique mix of these attributes that makes it better suited to certain tasks.

The most important reasons why more than a billion people will continue to perform the bulk of their computing on traditional PCs in 2013 are basic physical attributes: PCs have larger screens, full- or mid-size keyboards and mice or trackpads.

Whether reviewing documents, browsing the web or watching video, the image offered by a PC screen dwarfs that on a mobile device. A four inch smartphone screen offers a viewing area of just under seven square inches; a seven inch tablet has 21 square inches; a 9.7 inch tablet has 40 square inches. By comparison, a 14 inch laptop screen has 84 square inches and a 25 inch standalone desktop monitor gives our eyes 267 square inches to feast on. The diagonal measurements used by display makers are deceptive: for example, a desktop monitor with a diagonal measurement six times larger than a smartphone screen actually has a screen area that is 39 times larger.

Preference for larger screens manifests itself in other products, such as televisions. Hundreds of millions of people bought 40 inch TVs in the past five years through 2011. The fastest growing category in 2012 was 50 inch TVs6 . In the US, the average person watches over 30 hours per week of TV on large TV screens, but only minutes per week watching on four inch mobile screens7 . The conclusion is that size matters. Billions of people will – when they have the option – almost always choose to look at the largest screen available.

Further, people sometimes need to create content, not just view it passively. And while it is fairly straightforward to review a spreadsheet on a tablet, using the tablet to edit even a single cell of a spreadsheet is much more difficult. What's more, creating a spreadsheet on a tablet is almost impossible. Writing a 50-word email is fine on a smartphone or tablet, but longer writing demands a full keyboard. The cutoff appears to be about 500 words8 .

Certainly, there are hundreds of millions of people who almost never need to use a spreadsheet or type hundreds or thousands of words. However there are hundreds of millions who do.  And for those consumers, it would be practically impossible to replace their PCs with a smartphone or tablet.

Large screens and keyboards may work in a synergistic fashion. A recent survey asked smartphone owners which device— smartphone, tablet or PC —they preferred to perform 13 common tasks. Across every single use case queried, the respondents said they preferred to use their PC9 .

For many users, it does not appear to be a question of processing power. In 2009, the central processing unit (CPU) in a mid-range PC might have had four cores running at 2.5 GHz, while a mobile processor often had a single core running at 0.45 GHz. In early 2013, most PC CPUs will still have the same number of cores (now at 3GHz) but some high-end mobile devices will have CPUs running up to 2.5 GHz with four cores as well10 .  Nor is it applications; by and large the software that runs on PCs also has versions for tablets and smartphones.

Although the difference in processing power has narrowed between PCs and mobile devices, PCs offer the unique advantage of expansion capability. The average price of a basic PC is under $80011; however, high-end computer gamers can spend up to five times that amount on machines with more memory, ultrafast processors and thousand-dollar graphics cards. The installed base of these high-end machines is estimated at more than 50 million in 201212 . That’s a small percentage of the total PC installed base, but no tablet or smartphone can duplicate the experience.

There is also a significant difference in usage patterns between PCs and mobile devices.  Smartphone owners always have their device with them, and their interactions tend to be frequent but brief. One study found that owners checked their phones over 30 times a day, typically for less than 30 seconds at a time13 . In contrast, PC sessions tend to be longer, especially in the workplace, and PC time outside of work is more than an hour per day14 .

Despite the seeming ubiquity of smartphones, PCs still drive the vast majority of connected device traffic. In a study published in April 2012, 91.8 percent of all connected device traffic in the United States was from PCs, with only 5.2 percent from smartphones and 2.5 percent from tablets15 . Further, that mix is at the high end for mobile device use globally: as seen in Figure X, non-computer traffic across 10 countries ranged from a high of 11.5 percent to a low of 1.5 percent.

Although the share of connected device traffic from mobile devices is rising, even with very strong mobile and tablet growth their share will be no more than 15 percent worldwide by the end of 2013.

Bottom Line

About two billion people, or one third of the global population, are online16 , but that third is skewed toward developed markets and more affluent people. Of the 1.5 billion PCs currently in use, many are owned by enterprises and consumers who can afford to buy a PC, a smartphone and a tablet17 . That almost certainly will not be true of the next billion people who want to access the Internet. For economic reasons many will pick one, or at most two, devices out of the three primary form factors.

It seems likely that in the developing world the PC will be substantially less dominant, and in many cases displaced by the smartphone or tablet. That being said, as Figure X shows, the current percentage of non-computer traffic is not higher in developing markets. Although the data is only for a sample of 10 countries, the two developing markets in the sample show lower non-computer traffic than all but one developed market.

Many people assume that young consumers around the world will gravitate toward cheaper and newer form factors such as tablets, particularly because they tend to have less money than other demographic segments. However, at least one survey shows the exact opposite. When asked which device was most important, 68 percent of all surveyed users chose a laptop and only 32 percent chose a tablet. However, responses varied widely by age: 92 percent of 18-24 year olds said the PC was their preferred device, compared to only 60 percent of those age 66-751 . This suggests that the demographics of PC use are likely to be more complex than first thought.

Website designers are devoting significant resources to creating mobile versions, which is sensible given the rapid growth in those markets. However, the traditional PC-based sites ought not to be neglected: most visits will still come from computers with keyboards and large monitors, form factors that require different design rules.

Although a search of “tablets replacing enterprise PCs” generates over 24 million hits, the actual number of PCs that have been supplanted by tablets is probably much lower. Back in 2011, Deloitte predicted that tablets would be popular in the enterprise market, and so far companies around the world have purchased about 30 million of them. However, it’s likely that only 10-15 million of those units are currently being used as PC replacements. In fact, one thing that many of the most publicized examples of enterprise tablet usage have in common is that they replace paper, not PCs -- whether it is pilots taking tablets into the cockpit, doctors reviewing medical records in hospitals, restaurants showing wine lists or boards of directors using them as binders. While the enterprise PC installed base is about 500 million19 , at most 15 million enterprise tablets are being used as someone’s principal computing device. Also, fewer than 5 million of these are complete PC replacements where employees had PCs taken away and now rely solely on tablets to do 100 percent of their work tasks.

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1 Those who have tablets are likely to have lower PC use, of course. But even in developed markets, tablet penetration is less than 25 percent. Source: Pew Internet: Mobile, The Pew Research Center, 4 December 2012. See: http://pewinternet.org/Commentary/2012/February/Pew-Internet-Mobile.aspx

2 The definition of a smartphone for this prediction is based on consumer perceptions of what a smartphone is, rather than the standard industry definition, which pivots on the type of operating system (OS) used. Many consumers, particularly middle majority adopters, are likely to consider phones as smart if they have touch screens or full keyboards and they can use apps and not based on what intangible OS is under the hood.

3a Deloitte Touche Tohmatsu Limited analysis which includes sales estimates for tablets and smartphones (based on our broader definition of smartphones). The estimates are based on existing knowledge, industry conversations and published industry estimates and forecasts such as: Nearly 1 Billion Smart Connected Devices Shipped in 2011 with Shipments Expected to Double by 2016, According to IDC, IDC, 28 March 2012. See: http://www.idc.com/getdoc.jsp?containerId=prUS23398412; Source: IDC Raises Its Worldwide Tablet Forecast on Continued Strong Demand and Forthcoming New Product Launches, IDC, 28 September 2012. See: https://www.idc.com/getdoc.jsp?containerId=prUS23696912; Source: Gartner Says Worldwide Media Tablets Sales to Reach 119 Million Units in 2012, Gartner, 10 April 2012. See: http://www.gartner.com/it/page.jsp?id=1980115

3b Deloitte Touche Tohmatsu Limited estimates based on existing knowledge, conversations with industry players and published industry estimates and forecasts

4 Source: Forecast: PC Installed Base, Worldwide, 2006-2015, March 2011 Update, Gartner, 24 March 2011. See: http://www.gartner.com/id=1602818 (requires subscription to read the full article)and Deloitte Touche Tohmatsu Limited estimate for 2013.

5 The volume for the installed base of tablets and smartphones are estimates based on existing knowledge, conversations with industry players and published industry estimates and forecast including. Source: Forrester: 760M Tablets In Use By 2016, Apple ‘Clear Leader’, Frames Also Enter The Frame, TechCrunch, 24 April 2012. See: http://techcrunch.com/2012/04/24/forrester-760m-tablets-in-use-by-2016-apple-clear-leader-frames-also-enter-the-frame/

6 Source: "Bigger is better": Big-screen LED TVs prove to be a growth category, current, 8 June 2012. See: http://www.current.com.au/2012/06/08/article/Bigger-is-better-Big-screen-LED-TVs-prove-to-be-a-growth-category/QXUKTCGIIX.html

7 Source: State of the Media: The Cross-Platform Report, Nielsen, March 2012. See: http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2012-Reports/Nielsen-Cross-Platform-Report-Q2-2012-final.pdf

8 Source: Poor auto-correction, predictive text and copy and paste functions mean tablets are not yet meeting user and corporate computing needs, Adaptxt, 12 July 2011. See: http://adaptxt.com/adaptxtlive/tablet-typing-must-leap-input-gap-replace-laptops

9 Sometimes tablets came ahead of smartphones and sometimes behind. Source: Devices Used for Online Activities by Smartphone Owners in Canada, Pininterest, April 2012. See: http://pinterest.com/pin/25192079136536721/

10 Comparing PC and mobile CPU power is about more than just the number of cores and clock speed. Nonetheless, the performance gap between mobile and computer processors has narrowed significantly in the past few years.

11 Source: PCs Are Selling Just Fine, Thank You, PCWorld, 25 January 2012. See: http://www.pcworld.com/article/248770/pcs_are_selling_just_fine_thank_you.html

12 Source: PC Gaming Market Alive and Thriving as Related Hardware Business Tops $23 Billion, HotHardware, 3 May 2012. See: http://hothardware.com/News/PC-Gaming-Market-Alive-and-Thriving-as-Related-Hardware-Business-Tops-23-Billion/

13 Source: Do you obsessively check your smartphone?, CNN, 28 July 2011. See: http://www.cnn.com/2011/HEALTH/07/28/ep.smartphone.obsessed.cohen/index.html

14 Source: State of the Media: The Cross-Platform Report, Nielsen, March 2012. See: http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2012-Reports/Nielsen-Cross-Platform-Report-Q2-2012-final.pdf

15 Other represents the final 0.5 percent. The comScore methodology states that “Internet traffic is measured…as census level page view data collected from more than a million domains tagging with comScore.” Source: 2012 MOBILE FUTURE IN FOCUS, Page 8, comScore, February 2012. See: http://www.mchn.com/sites/default/files/comScore%202012%20Mobile%20Future%20in%20Focus.pdf.  

16 Source: THE FUTURE OF DIGITAL, Business Insider, 27 November 2012. See: http://www.businessinsider.com/future-of-digital-slides-2012-11?op=1

17 Over 25 percent of American adults have access to all three form factors. Source: Half of U.S. adults own a smartphone or tablet, Pew survey says, Computerworld, 1 October 2012. See: http://www.computerworld.com/s/article/9231902/Half_of_U.S._adults_own_a_smartphone_or_tablet_Pew_survey_says

18 In fact the relationship was linear across each age group: as respondents got older they preferred tablets more. Source: Devices, Consumption, and the Digital Landscape 2012, Deloitte Development LLC, February 2012. See: http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_tmt_Executive_Summary_Devices_Study_052112.pdf

19 Deloitte Touche Tohmatsu Limited estimate

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