End of the PC Era: Dell Buyout, Problems for Microsoft and Intel
By on January 16th, 2013

After Apple launched the iPad in 2010, the technology market was disrupted. The PC gave way to touchscreen tablets. Many Goliath’s at the time, like Dell, Microsoft, and Intel saw the tablet market as being complimentary instead of as a substitute to their PC and laptop market.

“Tablets have dramatically changed the device landscape for PCs, not so much by cannibalizing PC sales, but by causing user shift to tablets,” says Mikako Kitagawa, principal analyst of Gartner.

The end of the PC era seemed all too clear with the dismal earnings shown by HP and Dell last quarter. Today it seems that Dell, which is the master of custom-delivered computers, is in talks for a buyout. Sources have said that Silver Lake Partners was in discussions with Dell for a leveraged buyout at around $13 to $14 per share. This will be one of the largest deals since the global recession.

This is seen as a desperate attempt by Dell to focus on new areas away from its core PC business. Its decline has been the worst in its sectors after its shipments fell by 21% to 9.2 million. This news resulted in a surge of its stock price to $12.29.  Dell has declined to comments on these developments.

Consumers are flocking towards tablets. A recent study has already claimed that at the current rate, tablets will outsell notebooks this year. This may be due to the booming tablet market in China and the recession. The report explains that tablet shipments will reach more than 240 million units worldwide this year, with notebooks forecast to reach 207 million units.

After Microsoft launched Windows 8 in October last year, the expected boost to their sales would have come from users who upgrade their operating systems, in addition to users who buy new PCs or laptops. However, the declining PC sales (down 6.4% in the last year) will give them cause for concern.

The rise of mobile systems is not helping Intel either. Its era of extraordinary profits and market invincibility seems to have come to an end. Intel’s shares have fallen by over 7% last year. Its competitors are chip manufacturers for tablets and smartphones who have to work with smaller profit margins. Having said that, Intel’s server chip market is still growing very fast. This is mainly due to the rise of cloud services. Also, Intel is fighting back with a strong focus on Ultrabook laptops that have touch screens.

(Source: Gartner and Reuters)

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Author: Edrea de Sousa Google Profile for Edrea de Sousa
A textbook twister and a writing typhoon. You can also catch me on Twitter (handle: edrea20).

Edrea de Sousa has written and can be contacted at edrea@techie-buzz.com.
  • Daniel Summers

    This is idiotic. PCs are powerful workstations that cannot be replaced by tablets or phones.

 
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