The PC is dead? Then the Chromebook must be comatose

Sorry, Apple fanboys and Android fanatics: The PC is back, whether you like it or not. The last weeks have given us a series of data points strongly indicating that sales of Windows PC have bottomed out after several years of steep declines and the platform is hardly moribund. As much as you’d like to believe that the Chromebook is gobbling serious market share — it isn’t.

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Consider the evidence:

• On Tuesday, Intel reported surprisingly strong earnings for the last quarter, and it’s noteworthy that revenue for its PC group was $8.7 billion, up 6 percent over last year.
• Worldwide PC shipments totaled 74.4 million units in the second quarter of 2014, a year-on-year decline of 1.7 percent, IDC reported last week. That’s the smallest decline in two years. The quarter’s shipments in the United States alone totaled more than 16.6 million, hardly a dead market. Sales of Windows laptops hit 31.2 million worldwide in the first three months of the year. Meanwhile, Apple sold just 3.2 million Macs worldwide, according to IDC.
• Total shipments of Chromebooks in the last five months amounted to about 800,000 units, according to NPD Group analyst Stephen Baker. Yes, that’s strong growth for the Google platform, but it hardly represents a major force in the market as many bloggers try to twist NPD’s data to claim.

Evidence like this has never stopped the Wintel haters from tweeting its obituary.

The ugly truth about the Chromebook sales Every time NPD releases numbers about Chromebook sales, the digerati get excited and link it to the imminent demise of the PC. That’s largely based on their unfortunate habit of bending facts to support preconceived notions and a refusal to understand what the sales figures from NPD actually mean.

Baker, the NPD analyst who follows that segment of the market, reports sales in the commercial distribution channel: resellers that largely sell to business. They do not reflect sales to consumers, so the channel represents a small slice of the entire market for PCs or whatever you want to call them. But many outlets on the Web misreport the Chromebook percentages for that one reseller channel as applying to the entire PC market, which NPD clearly says they do not.

Here’s what Baker reported this week: “Chromebook sales within the U.S. commercial channel increased 250 percent year-over-year and accounted for 35 percent of all channel notebooks sales.” He went on to say, “For the three weeks ending June 7, Chromebook sales made up more than 40 percent of Commercial Channel notebook sales, a significant bump from the 35 percent year-to-date.”

Right: 35 percent of all reseller channel notebook sales — not all sales, just reseller channel sales.

That’s not to say Chromebook sales haven’t increased. They obviously have, and in some areas the platform appears to be finding a niche. Baker tells me that Chomebooks are selling well in the education market. By that he means resellers’ sales to institutions, not to parents or students making back-to-school purchases — again, a significant difference.

If Chromebooks were flying off the shelves of Best Buy, it might indicate that the Chromebook is becoming accepted in the huge consumer market, but that’s not what’s happening. If you look at consumer sales of Chromebooks in addition to sales in the commercial channel, you get a mere 800,000 units sold over the last five months, Baker says.

That’s simply not a big deal.

I want to be careful to avoid giving the impression that Baker is cool to Chromebooks. He’s not. “Building on last year’s surprising strength, Chrome’s unit strength ahead of this year’s education buying season shows how it has become a legitimate third platform alongside Windows and Mac OS X and iOS,” he wrote.

Although few pundits acknowledged it, Baker’s report also included positive news about PCs. Windows desktop sales in the resellers’ commercial distribution channel increased by 25 percent in five months. Imagine that: Sales of Desktop PCs, another platform the smart guys have long since written off, is growing.

For PCs, it should be about finding a stable bottom, not a race to the bottom Given the Chromebook’s relatively tiny market share, it makes little sense for Microsoft and the PC makers to worry about it. They have other problems around the shift away from the PC’s dominance. And both companies know it.

Intel is struggling to find its footing in the new mobile-centric world, but revenue from its traditional core products gives it a good deal of breathing room to develop new lines of business. Microsoft is having a difficult time adapting to new realities, but even its Windows 8 debacle reflected a corporate acknowledgment that serious change is imperative.

Still, old habits die hard. Microsoft and some of its PC partners this week kicked off yet another race to the bottom with the announcement of an ultracheap PC called the Stream. It won’t fly any more than the netbook did, and in fact is simply a step backward. The PC’s problem isn’t its cost but its relevance in an increasingly mobile world.

Selling $200 PCs, which users should expect this Christmas, as Microsoft said at its Worldwide Partners Conference, makes no sense. The pricing will kill margins and probably win sales from only people who were thinking about buying cheap, 7-inch Android tablets.

Most people who opt for a PC, as opposed to a high-end iPad, like the platform and its ability to run familiar Windows productivity apps like Office. They won’t buy a slow, clunky PC — whether it is called a Stream or a netbook.

And that uptick in PC sales may be transitory, a brief respite from the PC market’s hitting true bottom. It’s quite likely that the end of Windows XP support is fueling a business upgrade cycle that may not have long legs.

Yes, the PC platform is in decline. But it’s a long way from dead. Just look at the evidence.

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This article, “The PC is dead? Then the Chromebook must be comatose,” was originally published by InfoWorld.com. Read more of Bill Snyder’s Tech’s Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.