Personal computers: Tablets should finally take over from laptops

Featured Sponsor

Store	Link	Sample Product
UK Artful Impressions	Premiere Etsy Store

When the iPad first went on sale in 2010, naysayers heralded the end of the laptop era. Ten iPad generations later and that prediction has yet to come to fruition. But the decline in sales over the past year suggests that the end of the laptop is approaching faster than ever.

The global market for personal computers has been shrinking for years, but many office workers still rely on them. In the first quarter, total desktop and laptop shipments fell a third from a year earlier, the fourth straight quarter of double-digit declines, according to Canalys data. Laptop shipments suffered the biggest drop, falling 34 percent compared to a 28 percent drop for desktop computers. These are now below the previous nadir in 2018.

On Wednesday, Lenovo profit loss underlined this. The world’s leading PC maker reported a 24 percent revenue drop in the first quarter. Net income fell 72 percent to $114 million, below expectations. The latest results mark its third consecutive quarter of declines. The shares fell 8 percent.

Weak sales numbers in China, the world’s biggest market, only add to the bad news. Instead of an expected industry rebound as its economy reopened, shipments in mainland China fell by a quarter.

Meanwhile, total tablet shipments increased 40 percent over the same period. Lenovo has a strong lineup of tablet devices. However, in China, Apple is dominant. Its first-quarter shipments more than doubled to 2.5 million units and it has nearly 40 percent of the local market share. Smaller local pairs have also done well. Honor tablet sales increased by two-thirds.

Lenovo needs alternative growth engines. Its operating margins are less than 5 percent. That explains its persistently cheap valuation, now at 8 times future earnings. This multiple is at the lower end of its already depressed three-year range.

Expansion into the IT, server, and smartphone service businesses helps; these represent about 40 percent of the group’s revenue. But the competition here is fiercer than for PCs.

Laptops are still ever-present in the workplace. But a lasting move away from these tools would mean that makers of accessories like portable displays, keyboards and Bluetooth speakers would have to outperform the computers themselves. The shutdown of laptops is near.