Tablets making an impact on OS and PC designs: IDC

The post-PC era is not yet upon us, executives from Intel and Advanced Micro Devices insisted, when questioned about the impact of tablets on their businesses.

“The impact of tablets was felt more on netbook sales, which were below expectations during the second quarter,” said Intel CEO Paul Otellini on an earnings conference call. “Discretionary spending by consumers was going more toward tablets than netbooks,” he said.

AMD officials concurred, saying tablets did not significantly cannibalise PC sales. “AMD views tablets as a market opportunity complementary to PCs,” said Rick Bergman, senior VP and GM of AMD’s products group. AMD in June introduced its first tablet chip, and the company in the past was criticised for relying overmuch on the PC market and not quickly recognising the tablet opportunity.

Gartner and IDC earlier this month reported slow gains in PC sales for the second quarter, partly affected by growing tablet purchases. Worldwide PC shipments totaled 84.4 million units during the second quarter, growing by just 2.6% year over year, according to IDC.

“The share of netbook sales as part of PC sales during the second quarter was 12%, down from 22% four quarters ago,” said David Daoud, research director of personal computing at IDC. “The void left by slumping netbook sales wasn’t filled by mainstream PCs, and PC makers are now scaling down netbook activity and investing more in tablets,” he added.

The tablet market is ruled by Apple, which sold 9.25 million iPads in the most recent fiscal quarter, an increase of 183% from the same quarter last year. Most of the Apple iOS and Android OS tablets today come with ARM processors, which are considered more power-efficient than Intel’s and AMD’s x86 chips. Intel and AMD are now developing faster and more power-efficient chips that can effectively compete with ARM processors in the tablet market.

Acknowledging the impact of tablets, Intel’s Otellini this week scaled down the PC sales forecast for the remainder of the year to 8%, down from a double-digit growth rate projected earlier this year.

“Even after I saw the numbers yesterday from Apple, and we get engaged in lots of Windows 8 and Android tablet design activity across the board, I believe this [tablet] category is additive to computing. I don’t think it’s going to replace any one category,” Otellini said.

“Many viewed netbooks as a different category, but they are value PCs with concessions on OS, screen size and performance,” said Nathan Brookwood, principal analyst at Insight 64.

“Netbooks have never been a separate product category. They were a price point,” Brookwood said, adding that tablets were complementary devices to PCs for lack of a keyboard and full productivity applications.

However, Daoud said that tablets nevertheless are having an impact on future PC and OS designs. Tablets thrive on media consumption and application delivery models championed by Apple, and Windows 8 might borrow some iPad features, Daoud said. As a hybrid OS combining PC and tablet capabilities such as touch, Windows 8 could redefine the way devices are built.

“Even the vendors — as they scale back their netbook activity — they are obviously contemplating where to go next with the media tablet strategy,” Daoud said. “All [device makers] will really need to have a consensus on how to build the next generation of PCs.”

“Intel is investing in the development of ultrabooks, which the company is promoting as the next generation of PCs. Intel has outlined ultrabooks as thin and light PCs with tablet features such as long battery life and being always connected. The concept has been well-received, and ultrabooks will make up 40% of consumer laptop sales next year,” Otellini said.

“It’s a holistic approach to moving the entire market to a different kind of form factor,” Otellini said.

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