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msnbc.com
updated 11/6/2008 8:59:48 AM ET 2008-11-06T13:59:48

Are desktop PCs going the way of the dinosaur?

"They have been, to a degree," says David Daoud, research manager for IDC's U.S. Quarterly PC Tracker and Personal Systems.

A recent IDC report found that among all buying categories —consumers, as well as small and large businesses, government and education — notebook shipments exceeded 55 percent in the third quarter, making it the first time "in the history of the industry" that desktop sales didn't dominate as the PC of choice.

Home users have been "ahead of the curve compared to the entire market for a long, long time now," he said. So far, this year, notebooks represent 64 percent of the consumer PCs shipped to the United States.

The popularity of notebooks is due, in part, to the continuing growth of wireless Internet connections both inside the home and out, the mobility of laptops themselves and their continuing price drops.

Last year, the average price for a consumer notebook was $1,000; this year it's $888, Daoud said.

Desktop prices have dropped, too, of course. "Right now you can get a desktop for $300," he said, but "there's really not room to lower those prices. It has reached a certain plateau, so it's really not benefiting from price decreases as much as what we're seeing on the laptop side."

By 2012, laptops will account for more than 80 percent of the consumer market, he said.

Lots of laptop competition
The large number of notebook manufacturers, including HP, Dell, Apple, Acer, Asus, Sony, Toshiba, Panasonic, Lenovo, also means more price competition. That's in contrast to desktop PCs, Daoud said.

"It's becoming more of a two-horse race between Dell and HP," he said. "On the laptop side, you have much more choice, many more vendors."

Desktops are "certainly showing an amount of fatigue, if you will," he said. "And cannibalization from laptops plays a major role in that trend."

A bit of that cannibalization is from the small but growing number of "netbooks," also called ultraportables or mini-notebooks. The 2- and 3-pound laptops generally cost $300 to $400, and but don't come with full-sized keyboards or much computing oomph. Their appeal is largely fo Internet and e-mail on the go.

Netbooks are finding a lot of success in Western Europe, Daoud said, where more than 6 million will be sold this year. The draw for Europeans?

"Most of those products are being sold through telecom companies there, that give them to customers as part of a two-year data contract" for Internet and e-mail use, he said.

In contrast, in the United States, where there are not yet such deals, "we're looking at less than 1 million units."

More stylish desktops
Heavyweights HP and Dell have also broadened their offerings this year to include such laptop lightweights.

But desktops remain a vital segment of their lineups, and their appearance is morphing to reflect changing times.

Both companies have stylish all-in-one desktop PCs that make the more traditional separate units of a CPU and monitor look a bit fuddy-duddy. Apple's all-in-one iMac design, incorporating the CPU into the monitor, helped start that trend.

HP has gone a step further with its TouchSmart IQ line of desktops, which are both sleek-looking and offer a touchscreen option for everything from Web surfing to drag-and-drop music playlists. The touch option coincides with a growing number of other consumer touchscreen devices, especially cell phones.

The company introduced its first TouchSmart PC early last year, and came out with a revamped lineup last summer, including a 25.5-inch widescreen model with a TV tuner and remote control, which starts at $2,100. The least expensive TouchSmart IQ starts at $1,299.

PC as TV screen
As consumers use their computers more and more for watching video, from YouTube clips to programs offered via TV networks' Web sites, the PC-as-TV notion, long heralded, but mainly used by technofiles, is finally gaining momentum.

That makes desktop offerings with larger monitors more appealing. Nineteen-inch screens are now considered "entry level," and 20-, 22- and 24-inch monitors are even better for video watchers, as well as gamers and "those who like to have multiple documents open on the screen, while watching streaming video," said David Galvin, HP's director of product marketing for consumer desktops.

It also doesn't hurt that the industrial design of the TouchSmart IQ, for example, "allows you to take the PC out of the home office and put it in a high-traffic area of your house, whether it's the family room, living room, den, kitchen," he said.

"It's attractive enough to satisfy the 'style police' in the house, and yet really useful to have Internet access nearby without having to walk into another room to see the news or the weather."

And while it used to be that the ability to upgrade a desktop PC's hard drive, memory or graphics card was considered a plus, it's not that much of a factor anymore in driving a buyer to a desktop, Galvin said.

Many customers who are interested in swapping out parts are often switching an older, cathode-ray tube monitor for a newer flat-screen display, but not necessarily changing other aspects of their desktops, he said.

'Real concept of personal computing'
It's not always an either-or decision when it comes to buying a laptop or desktop PC. Many homes have both, especially if a desktop PC is considered the "family" computer, and laptops are the personal property of individual family members.

"It's a real concept of personal computing," Daoud said. "The laptop belongs to you, as opposed to the family or household. And the performance of many of today's laptop systems are as good as that of desktops."

The small- and medium-size business market "is also showing strength and growth in the laptop segment, but not quite as fast as consumers in general," he said.

"They continue to value desktops for several reasons. One is the cost. It's still very cheap to buy a desktop — there's a $200 to $300 difference between a laptop and a desktop. and many small, medium and even large businesses don't really need so much mobility in their computing experience."

Storage matters
One of the reasons desktops will continue to find a home in the home is that desktop hard drives generally can hold more data than their laptop counterparts.

Storage capacity is becoming more important as consumers file away many gigabytes' worth of music, family photos and videos on the computer. The family PC is becoming a repository for very important memories.

Those who use laptops as their main computers are getting better about backing up such files to a devices like external hard drives, to take the digital weight off their notebooks. Of course, those with desktop PCs need to do the same, even if they have 1 terabyte of storage on their hard drives.

John Rydning, IDC's research director for hard disk drives, said that the maximum desktop hard drive capacity "will continue to outpace notebook hard drives for two reasons. The desktop hard disk drive can hold more disks inside the drive, plus the disks inside a desktop drive have a larger surface area than notebook hard drives."

However, he said, this year, for buyers, "both notebook and desktop PC capacity 'sweet spots' will be 160 gigabytes."

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