Tablets + Apps + Cloud to destroy the PC industry

The announcement of HP contemplating the departure of its PC business represents another event exhibiting the end of the PC industry as we know it. But the PC industry had already reached maturity a while ago; low margins, competition based on cost, and similar signs indicative of a mature industry. It should not be a surprise to refer to it as a dying industry. So why are we talking about it now?

There is a “creative destruction” event occurring right now; a Schumpeterian event. Apple’s iPad® is driving Schumpeterian forces leading to the destruction of the PC industry. While this is an invention of Schumpeterian magnitude, it did not occur in isolation. To destroy an old industry, significant industrial inventions are part of a conglomeration of multiple inventions or multiple events that give way to the new. Today’s conglomeration is composed of:

1. The Tablet
2. Application Markets
3. Cloud Computing

The tablet is providing a delightful user experience: Once you start playing with an iPad® you can’t stop. Yet, the tablet alone would provide very little benefit to users without an apps market (e.g. Apple’s App Store™, Android Market, etc.), as well as cloud computing (e.g. Apple’s iCloud®, Amazon Cloud Drive, etc.) to keep the tablet nice and light. With cloud computing, computer functionality becomes a utility.

The apps markets allow users to download numerous applications to do incredible things. And cloud computing allows the tablet to work without needing a large hard-drive attached to it, allowing the tablet perform many computing functions.

Furthermore, there are other significant trends driving the industry:

• New broadband networks available everywhere (4G wireless, cable modems, fiber to the home, hotels, airports, shops, restaurants, public places, etc.);
• Rapid software development;
• And massive eCommerce—pay for everything online using credit cards or PayPal.

The destruction of an industry happens when users no longer want to go back to their old habits and the old industry dries up. Schumpeterian events occur when multiple inventions and industry trends harmonize to give birth to a new industry.

References:

Andreessen, Marc. “Why Software Is Eating The World.“ The Wall Street Journal: Essay. 20 Aug 2011. Web. 2 Sep 2011.

<http://online.wsj.com/article/SB10001424053111903480904576512250915629460.html?KEYWORDS=why+software+is+eating+the+world>

Helft, Miguel. “Apple Unveils ‘Cloud’ Music and Storage Service.” The New York Times: Business Day; Technology. 6 Jun 2011. Web. 2 Sep 2011.

<http://www.nytimes.com/2011/06/07/technology/07apple.html>

Kopytoff, Verne, and Ian Austen. “As PCs Wane, Companies Look to Tablets.” The New York Times: Business Day; Technology. 19 Aug 2011. Web. 2 Sep 2011.

<http://www.nytimes.com/2011/08/20/technology/as-pcs-wane-companies-look-to-tablets.html>

Loftus, Tom. “Tech Today: H-P Reaction: The Day After.” WSJ Blogs: Digits; Technology News and Insights. 19 Aug 2011. Web. 2 Sep 2011.

<http://blogs.wsj.com/digits/2011/08/19/tech-today-h-p-reaction-the-day-after>