IBM: PCs Are Yesterday’s Technology. China: Sure, But Give Us Millions More.
"My primary computer now is a tablet."
--- Mark Dean CTO of IBM Middle East and Africa, 2011
Here's a classy move for you: sell your company to someone else, watch them reach new levels of success, then announce that your former product (and all others like it) is obsolete. Oh, IBM, you really are quite the dashing gentleman. In a recent blog post, IBM CTO Mark Dean opined that personal computers are "going the way of the vacuum tube, typewriter, vinyl records, CRT and incandescent light bulbs." In other words, PCs are dead.
Someone forgot to tell China.
Beijing-based Lenovo bought IBM's PC business back in 2005 and has been selling them like gangbusters since then. In fact, all of China is going PC crazy. As of the second quarter of 2011, China surpassed the US as the biggest market for personal computers (22% market share vs. 21%). The Wall Street Journal has more on China's silicon hunger in the video below. Is China gobbling up sales of a product that's on its way out? Are we in the post-PC era? Who's got it right IBM or Lenovo? Maybe, yes, and both. The world of computing is surely evolving, but don't get concerned about which slice of technological progress is being replaced and which isn't. Keep your eye on the forces behind those changes, that's where the real action is.
International Data Corp recently published their evaluation of the personal computer industry and found that China had taken the largest market share for Q2 2011 with 18.5 million units valued at $11.9 billion. The United States came in second with $11.7 billion. Now, IDC still predicts the US to come ahead for the year due to seasonal variations in sales, but 2012 will undoubtedly be China's year to rule the PC with projections of beating the US by millions of units. The Wall Street Journal summarizes this up nicely in the following video and gives their own conjecture as to why this is so (lower Chinese saturation, and US market interest in tablets/mobile):
You'll notice that the reasons WSJ gives for China's rise in PC consumption jive on a fundamental level with what Dean pointed out at IBM. We're in a post-PC era. And by "we", I mean the US. American interest in personal computers is now augmented by interest in tablets, mobile devices, and other form factors. That's not stopping us from buying computers, it's just changing what we're asking computers to do, and buying our hardware accordingly. As Dean puts it:
"PCs are being replaced at the center of computing not by another type of device—though there’s plenty of excitement about smart phones and tablets—but by new ideas about the role that computing can play in progress. These days, it’s becoming clear that innovation flourishes best not on devices but in the social spaces between them, where people and ideas meet and interact. It is there that computing can have the most powerful impact on economy, society and people’s lives."
What Dean says rings true for me. The most exciting developments in computing are the person to person applications. Most obviously I mean social networks, internet services, and the transformation file sharing has on intellectual property. On a deeper level though I'm talking about how computer-enabled applications fuel crowd-powered changes. Mobile phones are becoming one of the default platforms in Africa, with cheap smart phones giving hundreds of thousands of users access to the Android app market. On that platform we see innovators looking to effect health, education, and entrepreneurial endeavors. Similar scenarios are being played out all across the world and at every socio-economic level. Powered by (relatively) cheap digital technology, humanity is thinking up millions of new ideas for prosperity and profit. Computing in the 21st century is all about enabling people to enact change.
But that doesn't mean the PC is dead. It just means that the ecology of computing is going to have more than one level. China is now (or soon will be) the world's largest market for PCs. Guess what, it's also the fastest growing market for iPhones. That just makes sense - they have low saturation for many advanced technologies and they have a national interest in launching themselves into the forefront over every major industry. They're run by a group of scientists, for goodness sakes. China is going to gobble up computer power in all its incarnations, from desktops to server farms to smart phones.
So is every other developing nation.
We are in the post-PC era, but that era isn't about ditching one hunk of plastic wrapped silicon for the newest gadget, it's about what happens when we don't have personal computing but global computing. When most of us have access to a computer on a regular basis, the world will do different things with computers. We aren't there yet, but we're getting closer. IBM is hinting at what that world may look like: companies pushing the boundaries of technology to find the next level of application space. IBM invests $6 billion per year in R&D, with projects like Watson, which could evolve into a virtual doctor, or any number of other possibilities. Why develop a program that can talk like a human, and make decisions like a medical professional? Because post-PC computing will eventually allow anyone with a mobile phone access to it through the cloud. That's just one example. There will be millions more.
IBM declaring the PC dead and China buying record numbers of them are really the same story: "Computers are becoming democratized so it's time to see what they can really do." Just as some companies, like Lenovo, are having success bringing one tier of computing (PC) to new markets, other companies, like IBM, will need to expand what all forms of computing can do. And this won't be divided along West-East lines either. China's going to be right up there at the highest levels of computing looking to challenge IBM and all the other established names. The world is getting smaller and everyone willing to look a few years ahead will be scrambling to stay at the top of the technology pile. Ultimately I think that means humanity will have wider, cheaper access to all manner of devices running next generation applications that can have profound impacts on the fundamental challenges we face.
The era of global computing is near. The change that it brings is going to be unbelievable.
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