PC sales experience the Spinning Wheel of Death

Sales of PCs are (unsurprisingly) dropping - as Dell demands satisfaction and Apple gets into hot water

by Gabriella Griffith
Last Updated: 22 Aug 2013

The computer market is having an unsettled week. Sales in PCs, now increasingly the dinosaur of the computer world, have fallen for the fifth consecutive quarter – the longest decline in their 32-year history.
The dismal results, published by research firm Gartner, found global PC shipments reached 76 million units in the second quarter, a 10.9% drop from last year.
The unstoppable march of the tablet has been handed most of the blame; their nifty size and thrifty price have made them the computer device of choice for many.
‘We are seeing the PC market reduction directly tied to the shrinking installed base of PCs, as inexpensive tablets displace the low-end machines used primarily for consumption in mature and developed markets,’ said Mikako Kitagawa, analyst at Gartner.

The top three PC manufacturers all saw a decline in sales during the quarter. Chinese PC maker Lenovo took market share, with HP a close second and Dell coming in third.

... which brings us nicely to Dell: the computer hardware manufacturer is having its own moment in the spotlight, with the ongoing skirmish between founder Michael Dell and one of his biggest investors, Carl Icahn, hotting up.

The PC maker's ongoing misfortunes (see above) have inspired Dell to attempt to regain control of the company. The idea is he can make radical changes and turn its fortunes around. (The structure of the deal would also allow Dell to repatriate a ton of cash currently held offshore, without paying anything like the full rate of corporation tax. Handy huh?)

Dell has made a $13.65 a share offer to take the publicly listed firm back from shareholders, but has been met with fierce opposition from Icahn, who believes investors deserve a better price.
The latest twist in the saga has seen the Institutional Shareholder Services (ISS) come out in support of Dell. It advised shareholders would do better to cash out now and let Dell shoulder the task of turning the ailing company around.
‘If your chief executive is willing to buy your falling knife for the privilege of catching it, there is probably a price at which you should let him,’ ISS said.
'Falling knife', eh? They obviously don’t fancy the entrepreneur's chances.
Rival Apple is also in hot water: the technology firm has been found guilty of e-book price-fixing.
According to the federal judge overseeing Apple’s case, the computer giant played a ‘central role’ in an ebook price-fixing conspiracy, colluding with five publishing houses to increase the price of books in anticipation of the iPad launch back in 2009.
In a statement Apple dismissed the ruling as 'untrue' and vowed to clear its name.
‘Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations,' it said.

'When we introduced the iBookstore in 2010, we gave customers more choice, injecting much-needed innovation and competition into the market, breaking Amazon's monopolistic grip on the publishing industry. We've done nothing wrong and we will appeal the judge's decision.’
The market’s appetite for tablets will only serve to heighten the competition between Apple and Dell. Michael Dell will no doubt make a serious play for the market as Tim Cook tries to hold onto the iPad’s position as king of tablets.
Let the games begin.

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