The personal computer industry needs a jump-start — and it's counting on a rescue from emerging markets and a push into tablet computers.
The PC is still the backbone of the digital world, powering e-commerce, social networking and more. More than 1 million PCs are sold every day, and the industry is bigger than ever. But worldwide sales have slowed in recent years.
Market research firms IDC and Gartner Inc. last week said PC shipments worldwide grew at just over 2 percent in the second quarter, short of both firms' expectations.
Computer sales have fared worse in the U.S. and Europe, where PCs have become ubiquitous and market saturation is an issue.
Though office computers need to be upgraded regularly, businesses are only starting to spend money again as the economy slowly recovers. Meanwhile, consumers are updating their machines less often, spending their money instead on the tablet computers.
"This is a time of intense change," said Sarah Rotman Epps, a Forrester Research analyst who has studied the evolution of consumer technology. "New competition for PC manufacturers makes it just really, really hard to make a profit."
As a result, PC makers are looking to emerging markets to boost sales. The new strategy was evident at Intel's recent investors' conference, where the company's CEO, Paul Otellini, unveiled a map that identified where PC growth is expected to be strongest in coming years.
The U.S. and Europe were not highlighted. Otellini gestured instead toward places such as Brazil, Russia, India, China — the so-called "BRIC" countries — as well as Mexico, Venezuela, the Czech Republic, South Africa and Turkey. All are expected to experience double-digit percentage growth.
But emerging markets present a challenge as customers in those nations tend to have less disposable income than Americans and Europeans. So PC makers are also looking to gain share in the tablet computer market, which is dominated by Apple Inc.'s iPad.
About 50 million tablets are expected to be sold worldwide this year, and that could double to as many as 100 million next year, according to various estimates. Although that's still small compared with sales of 362 million PCs this year, as estimated by IDC, the PC industry has reason to worry because of how quickly the tablet has been able to claimed such a large corner of the market.
Many PC makers such as Hewlett-Packard Co., Dell Inc. and Lenovo Group Ltd. have responded by designing tablets of their own. But none of the new tablets has become a sensation like the iPad, which has sold 20 million units since it went on sale in April 2010.
"If you have a tablet, you don't turn on the PC as much," said Brian White, a Ticonderoga Securities analyst who covers the PC industry. "If you have a tablet, you may not bring your notebook on a trip. It's only going to get stronger, and tablets are going to get better and better. This is a legitimate threat to a PC maker. They have to have both, and unfortunately most are behind in the game."