Death of PC exaggerated, sales look OK

NEW YORK Wed May 18, 2011 5:44pm EDT

NVIDIA President and CEO Jen-Hsun Huang speaks during his keynote address at the GPU Technology Conference in San Jose, California September 21, 2010. REUTERS/Robert Galbraith

NVIDIA President and CEO Jen-Hsun Huang speaks during his keynote address at the GPU Technology Conference in San Jose, California September 21, 2010.

Credit: Reuters/Robert Galbraith

NEW YORK (Reuters) - Talk of the death of the desktop personal computer is premature, and the 'post-PC' era is not here just yet, according to industry executives at Reuters Global Technology Summit.

Sales of PCs this year may not match growth rates for smartphones and tablets, but key manufacturers believe businesses and emerging markets will keep the PC at the center of the computing experience, at least for the next few years.

"As wonderful as tablets are, it doesn't replace a workstation or a high-resolution display," Jen-Hsun Huang, co-founder and chief executive of chip designer Nvidia Corp (NVDA.O), told the summit in New York.

Just as cameras on phones have not stopped growth in high-end digital cameras, Huang said tablets will not replace powerful PCs.

"Even as we build these mobile devices -- and clearly it is consuming some parts of the PC market -- it feels like it is consuming the lower-performance part of the PC marketplace, for browsing content, content consumption."

It is not yet clear how much tablets are contributing to waning PC sales, which are estimated to have fallen about 1 percent in the first three months of this year, the first decline in almost two years.

Industry watchers are still unsure whether that was a temporary slip or an early sign that other devices -- such as Apple Inc's (AAPL.O) iPad -- have become more important.

"We're in this new world where instead of being PC-centric, there's no single device that dominates," said Rob Glaser, founder and chairman of digital media firm RealNetworks Inc (RNWK.O), who now also works at venture capital firm Accel Partners.

"In terms of importance to media creation, delivery and consumption, 'superphones' like the iPhone or the Android phones are -- plus or minus -- as important as the PC is today, and in the ascendant," Glaser told the summit in New York. "You can say without hesitation that three years from now, while the PC will still be important, it will be the second-most important device for content creation and consumption."

PC SALES REBOUND

With this sort of theory in mind, sales of tablets and smartphones are expected to grow much faster than PCs over the next few years.

Research firm Gartner still expects worldwide PC sales to grow 10.5 percent to 388 million units this year. That is well below its forecast of 15.9 percent growth, made in November, but a sign that the PC will co-exist with other devices.

"It (the PC) may change its appearance and its form, but it will continue to be a requirement for most people to have a desk environment that gives them easy access with a large screen and a fast input device," said Dave Johnson, head of strategy at Dell Inc DELL.O, the world's No. 3 PC maker behind Hewlett-Packard Co (HPQ.N) and Acer Inc (2353.TW).

"You'll see device proliferation," said Johnson. "Are some of these tablets going to cannibalize the PC? Some percentage of them will. But more and more, what I see, these are becoming another specialty purpose device."

Johnson said Dell was broadly in line with chipmaker Intel Corp (INTC.O), which this week said it expected PC unit sales to increase in the "low-double digits" this year, fueled by China and other emerging markets.

Intel's head of sales and marketing, Tom Kilroy, told the summit that the bullish forecast was helped by strength in businesses and emerging markets.

"What gives us confidence in the PC growth numbers was that the commercial business continues to be quite strong," said Kilroy. "Indonesia, Turkey, China, Brazil -- those growth rates are 15, 20, as high as 23 percent. That is a big catalyst for growth."

Kilroy said low penetration and affordable PCs means high growth rates in emerging markets should continue for some time.

Consumers in mature markets in North America and Europe remain a problem. HP cited an unexpected 20 percent dip in consumer PC sales this week as it cut its sales and profit targets for the year.

But Intel thinks overall sales are still set to rise, and the PC has a long-term future.

"Our track record of calling what we think are the growth numbers for the PC over the last few years has been spot-on," said Kilroy. "The opportunity to hit double digit growth is still very real."

(Reporting by Bill Rigby; Editing by Gary Hill)

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