Paradigm Shift: Smartphones Eclipsed PCs in Fourth Quarter

As has long been expected, smartphones sales have finally begun to exceed sales of personal computers.

In data first revealed by Fortune, various vendors shipped about 100.9 million smartphones in the fourth quarter compared to a little over 92 million PC shipments during the same period (the latter numbers came from IDC).

While analysts, including those at Morgan Stanley, expected smartphones to eventually surpass PCs in sales, it was not expected to happen before 2012.

Ramon Llamas, the senior research analyst for Mobile Phone and Technology and Trends at IDC, notes that most of those people who own a smartphone are likely to also own a PC. Llamas believes tablets pose a more viable threat to personal computers, as they are more versatile and more closely resemble PCs in their capabilities than do smartphones.

Furthermore, the reason for smartphone sales having surpassed PC sales may simply be that PCs have saturated the market and have a fairly slow turnover rate (in simple terms, people who own a PC generally get some pretty good mileage out of it before replacing it).

Conversely, smartphones, despite their enormous growth, still have a long way to go and grow before they reach any kind of saturation point. Besides that, people are more willing and more likely to replace or upgrade their smartphones more often than with PCs, not only because they are more likely to be lost, broken, or stolen, but because it costs less to do so.

Llamas expects that sales may “ping pong” between PCs and smartphones for the next year or so, but by the end of 2013, smartphones will likely be the consistent winner.

Overall, Llamas doesn’t believe that PC makers should be too concerned with the rise in smartphones, since most major producers, like Dell and HP, are already planning to diversify their lines with smartphones and tablets, and no longer depend entirely on PC sales.

“PCs, they’ll be there in some way, shape, or form, but for smartphones, the market is growing and a lot of competitors are getting into it bigger and bigger.” The important thing for these companies, says Llamas, will be to stand out from what is already a crowded marketplace.

Here’s how smartphone and PC makers are trading on the paradigm shifting news:

Apple Inc. (NASDAQ:AAPL): AAPL shares recently traded at $464.14, up $4.46, or 0.97%. They have traded in a 52-week range of $310.50 to $460.00. Volume today was 4,981,057 shares versus a 3-month average volume of 12,426,800 shares. The company’s trailing P/E is 13.22, while trailing earnings are $35.14 per share.

Google Inc. (NASDAQ:GOOG): GOOG shares recently traded at $606.10, up $9.77, or 1.64%. They have traded in a 52-week range of $473.02 to $642.96. Volume today was 1,968,035 shares versus a 3-month average volume of 3,048,040 shares. The company’s trailing P/E is 20.36, while trailing earnings are $29.76 per share.

Nokia Corporation (NYSE:NOK): NOK shares recently traded at $5.02, down $0.1, or 1.95%. They have traded in a 52-week range of $4.46 to $11.75. Volume today was 10,461,544 shares versus a 3-month average volume of 30,437,400 shares. The company’s trailing earnings are $-0.41 per share.

Microsoft Corporation (NASDAQ:MSFT): MSFT shares recently traded at $30.01, down $0.23, or 0.76%. They have traded in a 52-week range of $23.65 to $30.40. Volume today was 12,405,500 shares versus a 3-month average volume of 54,663,700 shares. The company’s trailing P/E is 10.89, while trailing earnings are $2.76 per share.

Dell Inc. (NASDAQ:DELL): DELL shares recently traded at $17.68, up $0.02, or 0.11%. They have traded in a 52-week range of $13.29 to $17.88. Volume today was 5,431,612 shares versus a 3-month average volume of 18,139,100 shares. The company’s trailing P/E is 9.10, while trailing earnings are $1.94 per share.

Hewlett-Packard Company (NYSE:HPQ): HPQ shares recently traded at $28.90, down $0.17, or 0.58%. They have traded in a 52-week range of $21.50 to $49.39. Volume today was 4,207,561 shares versus a 3-month average volume of 17,199,900 shares. The company’s trailing P/E is 8.72, while trailing earnings are $3.32 per share.

Research In Motion Limited (NASDAQ:RIMM): RIMM shares recently traded at $16.62, down $0.26, or 1.54%. They have traded in a 52-week range of $12.45 to $70.54. Volume today was 7,920,151 shares versus a 3-month average volume of 24,259,200 shares. The company’s trailing P/E is 3.91, while trailing earnings are $4.25 per share.

To contact the reporter on this story: Jonathan Morris at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com