The death of the PC may not be there, but the status quo is not optimistic

The latest issue of the US Barron's print edition says that while the PC market is not yet on the verge of desperation, the field is moribund from a variety of data, mainly because of structural and cultural reasons. However, driven by investor sentiment, PC-related stocks have emerged as a bull market.

The following is the full text of the article:

Data bleak

Last October, we published an article called "No, PC", which caused a lot of people's confusion. Now it seems that the PC's death may not have arrived, but the status quo is indeed not optimistic.

Global PC shipments fell 11% per cent year-on-year in the first half of the year. According to IDC, the US market research firm, PC shipments fell at their worst in the first quarter of this year. Gartner, another US market research firm, pointed out that shipments in the second quarter of this year had fallen for the fifth consecutive quarter, the longest record since data.

Based on 76 million PC shipments in the previous quarter, we have returned to the level of early 2008, on the eve of the financial crisis.

The conventional wisdom is that PCs will rebound in the second half of the year. After all, Intel has just unveiled a new generation of processors code-named Haswell, and has been well received, and its ultra-high energy efficiency is expected to detonate in the hyper-polar market-a product that has long been featured in a lightweight form and an extended battery-length. Microsoft is also expected to launch a major upgrade to Windows 8, responding to complaints from consumers and corporate users.

It's natural, but I don't think it's a bleak situation to change desktops and notebooks. The market is undergoing structural and cultural shifts at the same time, making it difficult to achieve a comprehensive recovery.

Structural transformation

Structurally, economic factors limit the company's PC replacement cycle. And because the current unemployment rate in the United States is as high as 7.6%, the number of employees in the company is hard to achieve without the need to reassemble desktops.

Jamie Dimon, CEO of JPMorgan Chase, said in an interview with CNBC in Friday that as the economy Dimon, lending will increase in the next year or two. But as the money flows into small businesses, the purchasing capital of PCs remains limited.

According to Gartner, Lenovo was the world's largest PC maker with a 16.7% share in the latest quarter, up from 14.9% last year. But in fact, the company's shipments still have a synchronised decline, which is enough to see the industry can not achieve a revival. Trend reversal can benefit all companies, but Lenovo's only job is to rotate industry hegemony. Lenovo's products are good, but in such a fully commercialized market, its share change may be affected by only a handful of buyers still pursuing subtle differences.

In the end, perhaps the most important structural factor in the PC market's resilience is that the industry still needs to compete with the data on the rise of netbooks-a rage product that, while cheap, has a worse performance.

In recent quarters, the biggest losses in market share have been the two companies that once relied on the rise of netbooks, Acer and Asustek. Acer's shipments fell by two digits in the third quarter of last year, while Acer fell 20% per cent in the previous quarter. Some would say that the actual situation of Acer and ASUS is not as bad as the data.

But when companies that once achieved double-digit growth suddenly shrink, the industry collapses.

The latest incarnation of netbooks is Chromebook, a notebook that carries Google's Chrome OS system. Samsung and Google made their own Chromebook prices at a minimum of 199 dollars.

Chromebook has sparked a lot of attention, and I've heard from many executives that the product will be a boost for the industry as a whole. However, CNBC reported in Friday that there is no clear data on shipments of such products. The best indicator may be traffic: less than 1% of the current network traffic originates from Chromebook.

So the most popular devices in the PC industry today may not be selling at all.

Cultural change

This brings us into a cultural change. Tablets are not just eating away at PC sales. Amit Daryanani, Amit Dayanani Capital market analyst at Royal Bank of Canada, estimates that this year's tablet sales will reach 196 million units, equivalent to two-thirds of PC sales, up 63% per cent year-on-year.

More surprisingly, Wall Street has even lowered its expectations of smartphones. The shares of the two companies are under pressure as markets predict that Samsung and Apple-led high-end smartphone markets are not up to expectations.

Why? It is certainly one of the reasons that the affluent population targeted by such products has become saturated.

More importantly, people now value more than hardware, but content and application. We all want to watch TV on a variety of devices, and we all want to work and play on smartphones and tablets in more ways.

That's the real problem with PCs, which can run any software you want, but it's not going to get the most out of books, movies, music, apps--and Apple's App store and Google's play. People want ecosystems, and in the process of using the ecosystem, they have moved on to non-PC devices.

Share price rises

Ironically, the old brand, closely linked to the PC market, is the best performing stock in the market this year. Intel's share price has risen 15% per cent this year, less than the Nasdaq 19%, but most of the gains have been made in the past quarter. Microsoft Rose 34%.

While HP's dominance of the PC market has been taken away by Lenovo, the company has achieved a staggering 84% per cent increase in the outlook for recovery. Dell's share price also rose 31% per cent in the battle between CEO Michael Dell and activist investor Icahn Carl Icahn.

From the weakness of the PC market, this year's rally is clearly driven by emotional factors rather than fundamentals.

I believe these stocks will continue to prosper this summer. Both Intel and Microsoft will pay high dividends and investors are willing to Jews their PC business. Meanwhile, Dell and Hewlett-Packard still have a lot of stories to talk about in the short term.

In short, the PC market is doing badly, but PC stocks aren't too bad.