Tablet mania isn't the only reason PC sales are down. There's also the failure to turn corporate profits into jobs
The latest numbers on the devastation wrought upon the personal computer industry by the mighty iPad are nothing short of stunning. While Apple was earning blowout profits from iPad sales, Bloomberg reports that Dell, Microsoft and HP all took major hits in the first quarter.
Hewlett Packard’s consumer PC sales dropped 23 percent, Dell’s fell by 7.5 percent, and Microsoft Windows sales fell by 4.4 percent.
The popularity of the iPad is clearly one major factor, but buried deep in the story is an intriguing hint of another. Computer systems sales to corporations appear robust, but consumers are holding back:
In a conference call yesterday, [HP CEO Leo] Apotheker bemoaned a “bifurcated” PC market, where companies are spending and consumers aren’t. Sales in the company’s personal systems group fell 5.4 percent to $9.42 billion last quarter.
What could explain such a phenomenon, aside from the iPad craze?
How about the fact that corporate balance sheets are doing great, but unemployment is at 9 percent?
It’s been the big story of the last two years. There’s an economic recovery in the corporate sector, but it hasn’t translated into significant hiring. The data from the PC sector plug right in:
As economic growth turned up in 2009 and earnings started to rebound, businesses began to spend on new equipment, machinery and software. Such spending has steadily increased since mid-2009, and rose 15 percent in 2010 after falling 15 percent in 2009 and 2.4 percent in 2008.
That has helped make businesses more efficient, enabling them to do more with fewer employees.
There’s your “bifurcated” market. Corporations investing their profits in technology upgrades that allow them to squeeze more work out of fewer employees, while consumers — excluding those who have succumbed to the lure of the iPad — hold fire and stay chained to last year’s model.