Here’s Why the PC Industry Is In a Spiral (And Apple Doesn’t Care)
An October 10 report from Gartner has made the rounds and the personal computing industry is worse for the wear. Worldwide PC shipments declined 8.3 percent in the third quarter of 2012 compared with 2011, and Hewlett-Packard (NYSE:HPQ) has been dethroned by Lenovo. The news has spurred a new round of skepticism surrounding the future of the PC, with industry giants like Hewlett-Packard and Dell (NASDAQ:DELL) in the spotlight. In order to cut costs and remain above water as the computing landscape shifts, both companies have announced layoffs.
Companies down the production chain are being forced to cut costs as demand for chips dwindles with PC shipments. Applied Materials (NASDAQ:AMAT) recently announced that it will cut as much as 9 percent of its workforce — or 1,300 positions — initially through a voluntary retirement program. Now, according to Bloomberg, Advanced Micro Devices (NYSE:AMD) is slated to cut between 10 and 20 percent of its workforce, roughly 1,170 to 2,340 people.
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“With PC demand being so weak, we don’t think the company has any choice but to do some considerable cost-cutting measures,” Wedbush Securities analyst Betsy Van Hees told Bloomberg. This comes after a 10 percent workforce cut that was announced last November.
The rise of smartphone and tablet devices echo the explosive growth of the PC in its prime. Apple (NASDAQ:AAPL) has soared to unprecedented heights being the iPhone and iPad, providing a massively popular alternative to the traditional PC. A different type of chip and a different type of manufacturer are needed to drive mobile devices, which are quickly becoming a customer’s primary interface with technology. Companies with strategies predicated on PC use have started to adapt.
Microsoft (NASDAQ:MSFT) is slated to release Windows 8 on October 26. The industry is hoping that the operating system spurs some interest and sales in the PC market, but Microsoft is clearly not counting on the PC to last forever. Windows 8 is designed to begin bridging the gap between the PC and mobile environment. The company is releasing its Surface tablet at the same time as the OS, and pushing its related smartphone platform into the market spearheaded by the Nokia (NYSE:NOK) Lumia 920.