Why Tablets Won't Destroy the Laptop Market
Business + Economy

Why Tablets Won't Destroy the Laptop Market

REUTERS/Robert Galbraith

June was a big month for the PC. Intel Corporation (NASDAQ:INTC) led things off with the release of its widely-anticipated Haswell processor, calling it the “largest generation-to-generation improvement in battery life in Intel history.” PC makers took advantage of the Computex expo in Taipei to refresh their lineups. Sony Corporation (NYSE:SNE) introduced a 13-inch Windows 8 tablet that lasts 10 hours on a charge, and Dell Inc. (NASDAQ:DELL) claims that its new XPS 12 ultrabook will run for 9 hours.

Solid numbers – but as usual, it was left to Apple Inc. (NASDAQ:AAPL) to make a grand statement. The company did so the following week at WDC, releasing a laptop with longer battery life than either the iPad or the iPhone. Apple claims that the new 13-inch MacBook Air will offer users up to 12 hours of wireless Web surfing – an estimate confirmed by early reviewers – versus 10 hours on its ultraportable iOS devices. The 11-inch version of the Air accomplishes something even more remarkable, and with a battery smaller than the iPad’s (38 watt-hours vs. 42.5), it lasts nearly as long.

The personal computer has entered the mobile era. With Microsoft Corporation’s (NASDAQ:MSFT) Windows 8, it’s also ventured into touchscreens; one might almost think that the PC is in danger of turning into a tablet. It isn’t. Computer manufacturers may have adopted the advantages of portability and touch, but in recent years the PC and tablet markets – always different – have diverged even further. These are not two competing form factors on a collision course, but rather, two different ways of interacting with technology, each one useful.

Let’s start with the obvious: PCs are growing larger while tablets are getting smaller. The original iPad boasted a 9.7-inch display. Today, of the 10 best-selling tablets on Amazon.com, Inc. (NASDAQ:AMZN), two-thirds come with 7-inch screens. Data from game developer Animoca tells the same tale: 7-inch tablets have won out. Smaller-sized PCs, on the other hand, have performed poorly. The netbook market has collapsed from 32 million units shipped in 2010 to an estimated 4 million in 2013, and in its place we’ve seen manufacturers shift their focus to ultrabooks in the 13- and 15-inch range, and towards machines that are thin and light, rather than small.

At the same time, prices have diverged. In 2010 the iPad was priced at $499+, while today the best-selling tablets are all closer to (or under) $300 – a trend Apple has followed by introducing the lower-priced iPad mini. And while the top-selling PCs still tend to be budget laptops in the $500 range, ultrabooks have tilted the market towards higher price points. They’ve fallen in price, and can be had now for as low as $700, but ultrabooks aren’t aimed at the sort of low-needs, low-budget consumer who would probably be satisfied with a Kindle Fire.

These are two different markets, and it’s misleading to say that one is cannibalizing the other. It’s true that we can only spend a dollar one way – and that on some level, everything we buy is in competition with everything else – but if tablets were actually replacing PCs, they should above all be hurting laptops, which are the most comparable in terms of functionality. Instead, it’s desktops that have underperformed the most. The PC market peaked in 4Q 2011, and 12 months later desktop revenue had fallen 13% at the five largest manufacturers, vs. a smaller 7% decline for notebooks. Perhaps the PC refresh cycle has gotten longer, or maybe software developers – focused on the mobile market – have failed to push the envelope in the high-powered desktop market. Regardless, there’s more at work here than competition from ultraportable devices.

Productivity remains a dividing line between PCs and tablets. It’s easy to find anecdotal evidence of tablets in the workplace – there’s also an abundance of anecdotal evidence for Sasquatch – but a recent report from Gartner puts the matter clearly: "Unlike the consumer PC segment, the professional PC market, which accounts for about half of overall PC shipments, has seen growth, driven by continuing PC refreshes." Tablets have become common in areas like field work and the medical profession, but here they’re generally replacing a pen and paper, not a computer. 

It might be oversimplifying to say that tablets are functional, while PCs are multifunctional, but it does serve to highlight a difference more fundamental than touch screens, or battery life. You might surf the Web on your Samsung (OTCMKTS:SSNLF) Galaxy Tab, or you might write an article on it; but if you need to do both, you’re better off using a Samsung laptop. Life (and work) often requires that we do many things at once. Large screens, keyboards, and hardware are all useful – depending on what (or how much) we’re doing. Tablets aren’t likely to replace PCs, or vice versa. Instead, we should expect these markets to continue diverging, and to continue providing us with two different tools, suited to two very different purposes.

This article originally appeared at Minyanville. Read more from Minyanville:

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