Tablets’ Surge Spells Declines for PC, Peripherals Makers, Report Says

Consumer interest in self-sufficient tablets has led to drops in shipments of PC-related add-on devices including Blu-ray and DVD aftermarket kits, graphics cards and software, DTC said. “Modest” declines will continue over the next five years due to tablets’ inability in their current form to accommodate most peripherals without adapters, added cost and inconvenience, the report said. Retail software sales are likely to be negatively impacted as well since video software is used to consume and create video content on physical media, which doesn’t have a role in the tablet world, DTC said.

Although PC makers will take a hit in the form of “slight” year-over-year declines over the next five years, shipments won’t “fall off a cliff,” DTC said. Replacement sales and strong momentum from Ultrabooks will “help keep the PC market afloat,” it said. DTC forecasts PC shipments will reach 326 million by the end of this year, slipping to 318 million in 2013. Annual shipments are expected to hover above 300 million until 2017 when DTC estimates that 294 million PCs will ship.

The meteoric spike of triple-digit tablet growth, meanwhile, will slow over the next five years, DTC said, but remain in the double digits for the forecast period “and likely beyond.” Expected continued innovation from Apple, market share gains for Android tablet suppliers and Microsoft’s dovetailing of Windows 8 with tablet design should all drive the market to more than 100 million units by next year, it said.

MobileTrax, meanwhile, more sanguine about tablets’ potential, puts annual sales at 116.5 million units this year, 166.6 million in 2013 and jumping to 366 million units in four years. Analyst Gerry Purdy noted in a report released Thursday that Microsoft’s Surface, positioned as a tablet, is actually two PC platforms in one device, using a traditional x86 Intel architecture that runs current PC applications and another based on ARM that’s used in both iPad and some Android-based tablets. He said the 10-inch tablet incorporates USB ports and a cover with a built-in keyboard and that “for all practical purposes, Surface is a PC, although one that is very thin and light. It boots up and operates just like a PC because it is a PC,” he said. MobileTrax’s tablet forecast doesn’t include Surface estimates, Purdy told us, and the company is devising its strategy on how to categorize Surface. Some researchers are likely to count it as a PC as well as a tablet, he said. Industry-wide, he said, “We might get double counting because of this.”

Purdy sees Surface finding a receptive audience in the enterprise world -- field service, construction, transportation and field sales environments like pharmaceuticals -- where customers have an existing investment in PC applications and can extend them into the tablet space “with very little change.” He cited Microsoft’s position that many users will prefer a “full PC” rather than a “less than full tablet” that runs a non-traditional operating system and apps. He noted that Microsoft is targeting Surface at the Ultrabook market where PC manufacturers have built thin notebook PCs that primarily use flash storage rather than a standard hard drive.

Surface won’t disrupt the iPad’s trajectory when it hits the market, Purdy maintained. Nor is Apple likely to try to mimic Microsoft’s hybrid strategy. Apple CEO Tim Cook has said he doesn’t see merging the Mac OS and iOS, although it’s technically possible to do so because it would significantly alter the user experience -- “and not for the better,” Purdy said. “The tablet market is still quite young and has a long way to grow.”