Tech Stocks Beware: PCs Almost a Thing of the Past

Tech Stocks BewareThe verdict is in, and it doesn’t look good for the personal computer (PC) market. But again, this should not be a surprise, as I have been saying for quite some time that the demand for PCs is on the decline, and I wouldn’t bet on a reversal anytime soon. (See “Tablet Market Gaining Altitude.”)

Think about it. Do you actually own a PC at home? If you do, as I do, it’s probably a few years old and was manufactured before the advent of the tablet.

Sales of PCs in the U.S. fell 11% year-over-year in the second quarter, according to International Data Corporation (IDC). Based on research by Gartner, Inc., the decline was reported to be six percent, but this figure was based on sales of PCs and laptops. On a global basis, PC shipments contracted a mere 0.1% year-over-year, but the Gartner research showed it was the seventh straight month of declines or only slight increases. My stock analysis: PC makers beware.

The sales results indicate a PC market that remains in a death-lock that even Houdini may have found impossible to escape.

Top PC makers, such as Hewlett-Packard Company (NYSE/HPQ) and Dell Inc. (NASDAQ/DELL), are hurting, based on my stock analysis.

Again, based on my stock analysis, you can blame the hurting PC market on the superlative rise in tablets.

The global market for tablets is estimated to rise to around $31.9 billion this year with over 100 million units delivered, according to Visiongain. By 2016, it’s estimated that about 360 million tablets will be sold, according to IHS iSuppli.

I believe poor decision-making by management at both Hewlett-Packard and Dell is to blame for the companies’ poor results.

Hewlett-Packard had been in the tablet market but exited, fearing market leader Apple Inc. (NASDAQ/AAPL) had a stranglehold on it. Dell continues to produce tablets, along with a hybrid ultrabook that can also work as a tablet when you flip the screen around. In my stock analysis, the idea is gimmicky and will pose no challenge for the market leader.

Apple has no fear.

The reality is that users want tablets, not hybrids or smaller-sized laptops. The PC makers are beginning to understand this, but at this stage, it will be very difficult to change their course of direction and catch Apple, according to my market analysis. The same thing happened to Blockbuster after the company failed to adapt to the shift to DVD rentals via mail and ultimately online streaming, which then-upstart Netflix, Inc. (NASDAQ/NFLX) recognized in 2002.

Based on my stock analysis, I believe the failure of the PC makers to recognize the industry’s shift to tablets as an extension of the smartphone was a fatal mistake that companies, such as Dell and Hewlett-Packard, are paying for now.

And to make matters worse, the adoption of the tablet will likely intensify, according to my stock analysis.

Microsoft Corporation (NASDAQ/MSFT) recently announced it was entering the hardware business via its upcoming “Surface” tablet, running on the next version of the “Windows 8” operating system. What’s interesting is that the new platform and associated applications will be able to operate in a wide variety of environments, including PCs, laptops, and, yes, tablets.

Amazon.com, Inc. (NASDAQ/AMZN) is speculated to be on the verge of working on a possible tablet that will offer much more functionality than its “Kindle Fire.”

Tablets are advancing in technology and more powerful applications, which will further erode the demand for PCs and laptops, based on my stock analysis.