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PC Sales Collapse: Is the Personal Computer Dead?

Henry Blodget
Thursday, 11 Oct 2012 | 11:10 AM ET

Sales of personal computers worldwide declined a shocking 8% in the third quarter, according to technology research firm Gartner.

Part of the decline was the result of people waiting for the release of Microsoft's latest operating system, Windows 8, which comes out this month. But part of it was also likely due to cannibalization of PC sales by smartphones and tablets, especially tablets.

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Last year, in a profound shift in consumer technology usage, the number of smartphones and tablets sold eclipsed the number of PCs sold. This trend is likely to continue in future years, which means that PCs will become an ever-smaller portion of the overall personal-computing market.

PCs aren't likely to die off completely—it's hard to imagine those who work at desks ever sacrificing large screens and keyboards for tablets or smartphones. But many tasks that used to be done on a PC are now done on smartphones and tablets, which reduces the need for full-fledged PCs. And it's possible that the smaller devices will eventually become the "brains" that power many of the screens and keyboards that people use in the office.

(For example, I carry a MacBook Air laptop everywhere and plug it into a dock when I'm in the office. In the "old days, " I might have had a laptop and a desktop PC, but there's no need for the desktop PC anymore. And those who don't do as much writing as I do can get by with just a tablet.)

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The impact of this shift on the technology market is enormous. For the past two decades, personal computing has been dominated by the "Wintel" monopoly—the standard platform created by Intel's chips and Microsoft's operating system that almost all personal computing applications were built on top of. In the past five years, however, this monopoly has been steadily eroded by the rise of Apple's operating system, iOS, and Google's Android, to the point where Wintel devices now make up less than half of the personal computing platform.

Those who control platforms generally control technology markets, and one of the reasons Apple has become the world's most valuable company is that it now owns the platform on which so many of today's "apps" are built. Meanwhile, Microsoft is basically nowhere in the tablet and smartphone markets, and the market that it still rules—personal computers—is shrinking. This trend has been devastating not just for Microsoft and Intel, but for Dell , HP , and the many other companies that once feasted at the Wintel trough.

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