Booming Mobile Web Access Signals the Death of PCs

Every year, Mary Meeker, the former Morgan Stanley star analyst now associated with KPCB, takes the pulse of the Internet and puts into perspective the dynamics of the mobile sector in particular, granting annual insight to her world.

This year, however, Meeker released a mid-year update to a small San Francisco crowd. According to Meeker, Apple is losing ground in the tablet segment to the advantage of Android devices, driven largely by the success of Samsung and Amazon. Android has also surpassed Windows, now confirmed as the most popular operating system on Internet-enabled devices.

Mobile to Overtake PC

One of the biggest bright spots of this report: Android’s mobile phone penetration rate is six times faster than the iPhone.  Moreover, in the first quarter of 2012, Android surpassed Windows as the dominate operating system across all Internet devices.

Internet-enabled Android devices reach about 90 million units in a single quarter. Quarterly shipments of Android devices are expected to reach 160 million units by the end of 2013. During same time, Windows devices will reach 100 million units, and iOS devices will reach 80 million units.

Technological advances in smartphones and tablets, and the birth of the mobile applications are revolutionizing the market for both mobility and business users.  Sales of mobile devices are a direct threat to computer sales. According to Apple, 80 percent of Fortune 500 companies have deployed pilot projects to incorporate the iPad in their business processes.

It is estimated that the number of Americans who have access to the web using a PC in 2016 will be reduced to 225 million versus 240 million in 2012. During the same period, the mobile Internet audience will grow from 174 to 265 million users, predicts IDC.

The reduction in expected sales growth based on expectations of lower demand for laptops because of a general loss in consumer enthusiasm for these devices. In this sense, notebook PCs are no longer the preferred platform for consumer Internet access, which is available through a multitude of mobile devices, including the Apple iPad and Android based devices.

Lenovo PCs Still Doing Well

In today’s society, constant access to content, anytime, anywhere has become essential. Desktop and notebook vendors such as Dell and HP, are in an uncomfortable spot for this very reason.  The tablets have characteristics like size and weight that make them easy to transport, and the use of Flash technology for instant-on ensures easy operation, while the typical computer always needs a few seconds to boot up.

With the purchase of the PC unit of IBM seven years ago, Lenovo was able to fully enter the market with a marginal PC share. One point in Lenovo’s favor is that the company has taken a very aggressive position in pricing their products, especially in the professional market. As a result, Lenovo has gained a significant market share over the years, exceeding its average regional growth rate in all regions and overtaking HP as number one PC maker in the world.

Unlike its competitors, much of the growth of the firm comes from sales generated in the Asian giant. Lenovo’s rise was also aided by the acquisition of Germany’s Medion and an alliance with Japan’s NEC last year.

HP has lost its share in the market due to internal strategy that has been trying to cope with the trend in consumption of mobile devices, which has replaced tightly to computers.

While Dell, HP and Lenovo all recognize the promise of mobile devices moving forward, only Lenovo has the global market share and mobile device line up to maintain traction during this major industry shift.  In fact, Lenovo’s taking the PC-mobile transition literally, releasing a series of PC-tablet hybrids earlier this year.

PC Makers’ Mobile Strategies

HP used to be the cradle of innovation for PC technology.  But after five years of egregious errors and missed opportunities in mobile, HP needs a big win to satisfy investors and consumers alike.

The company under the leadership of Meg Whitman is attempting to save what remains of one of the most iconic brands of Silicon Valley. HP aims to once again tackle the smartphone market after pushing a very hesitant strategy in this area, characterized by product flops in both the hardware and software departments.

HP is reportedly moving its WebOS platform to open source and plans on introducing new mobile devices in the coming months. The company recently celebrated its 73rd birthday by creating an entity dedicated to mobility in general, tablets particular. With this, the U.S. manufacturer wants to develop a tablet OS and app store, or become a partner of Microsoft, another software giant challenged by the post-PC era.

Like HP, Dell is stagnating in PC sales, a once very profitable business, and has been stuck in a mobile transaction that was less attractive to Dell, with less opportunity for growth.  The company is diversifying its mobile strategy, having proposed tablets to run on both Android and Windows 8 OS. Michael Dell emphasized the curiosity of business against a Windows 8 tablet that can run Windows applications, presenting the possibility of interactions with corporate networks by introducing tablets and smartphones.

With a billion-dollar marketing campaign and a new operating system designed for touch-enabled devices, Windows 8 is a hopeful savior for most PC manufacturers, especially as it presents new opportunities to transition to the mobile business market.  The new system seems to have stimulated the innovation capabilities of PC manufacturers. The dominance of Microsoft in the PC can be an asset to convert a maximum of clients to approach the touch, and then push to adopt its other terminals. In addition to industry leader Lenovo, Asus, Acer, Samsung and Toshiba have all expressed interest in tablets running Android and Windows 8 software.

Windows out to suppress iOS devices

By the end of 2013, Meeker expects 100 million Windows devices will be shipped, compared to the 80 million iOS devices shipped per quarter.

With the launch of Windows Phone 8 and the prospect of growing an app marketplace, users can expect a rich experience from their Windows devices.  It’s an ecosystem war, as Microsoft must craft strong partnerships to rival Apple and Android.  Windows 8 also marks Microsoft’s refreshed efforts to challenge market leaders at Google and Apple.

Gartner predicts the alliance between Nokia and Microsoft is set to take the number three position in the smartphone market, surpassing Research in Motion’s BlackBerry and matching the iPhone by 2013 or 2014. The uniquely personal OS, along with widespread partner support and the wave of excitement surrounding Windows 8, make this an exciting year for Windows Phone.

Microsoft’s advantage now is the integration Window 8 across a whole range of devices – work computers, tablets, and smartphones and gaming consoles. It will provide third alternative to normal and corporate users. IT departments can now manage and apply company’s IT policies to all Windows devices, including Windows 8 phones. It could also likely to become a foundation for business phones, currently dominating by BlackBerry and iPhone.

Feature phones still reign

Lower-end smartphones or feature phones are finding favor in emerging markets, especially Asia, Africa and the Middle East where people are connecting to internet for the first time, or where the market is dominated by pre-paid subscriptions and price. These are also areas where there is less penetration of 3G or 4G technologies.

Marc Herson of 2go, a mobile social network with more than 20 million registered users in Africa, says 90% of Africa’s 500 million phone owners do not own a smartphone. Another report from mobile strategy firm VisionMobile found that, despite the iPhone vs. Android smartphone battle, global smartphone penetration (by OS) is at just 27%.

Berg Insight reports that users with feature phones are actively using mobile money for transactions. As per the report, mobile money users in emerging market are likely to increase from 61 million in 2011 to reach 381 million by 2017 at an annual growth rate of 36 percent.

Nokia’s mid-tier Symbian platforms and BlackBerry are still holding significant market share in these markets. India and Indonesia in particular provide a vast amount of opportunities for Nokia. Nokia (now in partner with Microsoft) has the advantage here as it does not have to compete against Apple in this segment of the telecom market. As the second-biggest seller of mobile phones in the world, Nokia has strong global franchise and distribution model in emerging markets.

Low-cost Android devices that sell for anywhere from $100 to $750 are slowly starting to compete with both of these platforms. Apple has high margin device sales, and is facing challenges as it attempts entry into emerging markets to take its share of the feature phone upgraders.

About Saroj Kar

Saroj is a Staff Writer at SiliconANGLE covering DevOps, social, mobile and gaming news. If you have a story idea or tip, send it to @SiliconAngle on Twitter.