End of Windows XP support nudges SMB PC sales amid hybrid adoption

PC sales hit their lowest mark ever in 2013, but among SMBs the PC is still the company workhorse, even amid mobile device adoption.

PC sales experienced their worst year ever in 2013, pushed down by the rush to tablets and other lightweight mobile devices. PC shipments fell nearly 7% in Q4 2013 over the same period the previous year, according to Gartner Inc. Pundits raced to pronounce the PC officially dead.

At small and medium-sized businesses (SMBs), however, the outlook on PCs is not nearly so black-and-white. Contrary to the worldwide trend, PC purchases by SMBs are expected to actually rise in 2014, due in part to Microsoft discontinuing support for its Windows XP operating system in April. Many SMBs have still not upgraded from XP to Windows 7 or 8, according to Mikako Kitagawa, principal analyst at Gartner. With the kill date for Windows XP support looming, she expects a hefty portion of SMBs still on XP to purchase machines that can accommodate the new operating systems.

What you're going to see on the PC side for business is continued experimentation from manufacturers: thin and light products, detachable devices that work as a tablet and a PC.

Stephen Baker,
vice president of industry analysis, NPD Group

The PC shopping spree for SMBs, however, likely will be short-lived, Kitagawa said, and the increased PC sales relatively modest. Moreover, the uptick in SMB orders for new PCs in 2014 doesn't mean these businesses aren't shopping for tablets, she added. "They're buying tablets, but they're adding tablets to their PCs … not replacing PCs at the moment."

Tablets complement but do not replace PCs

That rings true for P.D. Morrison, owner and CEO at P.D. Morrison Enterprises Inc. (PDME), an industrial and office supply company based in Austin, Texas. The 19-person company runs software specific to the industrial and office supply market, so traditional PCs and laptops are the backbone of the company, Morrison said. "All of my top managers … have laptops to work from and bring home. My customer service folks, my IT support and my accounting support all have desktops," he added.

At the same time, Morrison anticipates a shift to hybrid laptop-tablets among his executive team. "I can see them switching to laptops that are also tablets," he said.

In fact, PDME's CTO is already eyeballing a convertible Dell laptop that allows the screen to flip over the keyboard into a tablet, and Morrison said he would probably be using his convertible Asus laptop with a detachable keyboard more often if he hadn't purchased an iPad mini to use in his off hours. He bought the convertible laptop to get a feel for the hybrid laptop-tablet machines.

"[The CTO] is looking forward to having a laptop that's [also] a touchscreen tablet," he said. "That's probably going to be the way of the future, where you're going to have a unit that is both."

Hybrids to the fore

Morrison's observation dovetails with PC predictions from Stephen Baker, vice president of industry analysis for consumer technology at Port Washington, N.Y.-based research firm NPD Group Inc. "What you're going to see on the PC side for business is continued experimentation from manufacturers: thin and light products, detachable devices that work as a tablet and a PC," Baker said. Some of the devices will target the consumer market, but SMBs will likely be using them as well, either as company purchases or bring-your-own-device equipment.

For now, Baker sees a continuation of Windows 7 basic devices, including laptops and desktops, at most SMBs, augmented by a variety of computing devices that meet the specific needs of the various employee groups at a business, such as salespeople and executives.

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Others believe that even laptops will disappear from the SMB landscape. Jeff Kear, owner of Denver-based software firm Planning Pod, sees SMBs forgoing PCs for some or all of their employees in the future. Tablets are gaining traction for more computing tasks traditionally handled by PCs, he said. "Tablets with keyboards are often a cheaper and more versatile alternative to PCs for small businesses, especially startups."

The devices are also lighter and more portable than traditional laptops, which make them especially attractive to mobile workers. "When you often don't have easy or consistent access to Wi-Fi, choosing a cellular-ready tablet over a PC is a no-brainer," he added.

The bottom line is that despite worldwide PC sales, SMBs for the near term are purchasing and still using PCs to run their businesses. As hybrid laptop-tablet computers emerge, they may take the place of laptops, but many believe they will still essentially be PCs, albeit a new mobile version of the familiar standby.

Christine Parizo is a freelance writer specializing in business and technology. Contact her at christine@christineparizo.com.

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