Smart phone avalanche buries computer industry

The personal computer has dominated modern life for 25 years, but the often bulky devices are increasingly giving way to smaller, lighter smart phones and tablet computers.

The whole sector is scrambling to survive the avalanche set off by Apple under its late founder, Steve Jobs.

Technology giant Hewlett-Packard, whose business is still built on personal computers and printers, this week announced it would slash its payroll by 27,000 workers, or 8 per cent, by 2014 to eventually save at least 3 billion dollars a year. Managers were admitting to Wall Street that HP’s future was as a smaller company.

The world’s largest PC manufacturer has so far failed to connect with consumer demand for smart phones and tablets -- a new technology landscape of slender mobile devices dominated by Silicon Valley’s Apple and South Korea’s Samsung.

A world of mobile computing appears to have only a small space left for Hewlett-Packard, as well as PC competitor Dell, which has suffered shrinking sales recently. Both have failed to achieve the innovations to make a successful transition.

As early as 2010, when he launched the iPad, Jobs talked about the “post-PC world.” Other manufacturers did not take his vision seriously, and they continued to make their big desktop machines and laptops. One of their biggest innovations was to make PCs in colours other than the old “computer grey.” In time, Jobs was vindicated.

“Today, Apple is reinventing the phone,” he said in 2007, as he launched the iPhone.

At the time, it sounded like an exaggeration, but the cell phone with a touch-sensitive screen set new standards for performance and appearance. Above all, the iPhone redefined the industry, because for the first time it brought to the fore not the device but the software it holds: the apps.

At the start of 2010, Jobs dealt a definitive blow to the PC: he launched Apple’s tablet computer, the iPad. With it, the company again achieved a resounding success.

Over the past quarter alone, 35 million iPhones have been sold, along with close to 12 million iPads. By comparison, based on the data of market research firm Gartner, 89 million PCs were sold over the same period by all manufacturers put together.

PC firms tried to come up with their own tablets, well before Apple did. More than 10 years ago in Las Vegas, Microsoft founder Bill Gates presented his vision of the digital table computer. The smartphone, too, is hardly Jobs’ invention.

However, alternative devices were too expensive, inconvenient or just too ugly to become bestsellers.

Now, little is left for PC manufacturers to do but chase Apple and try not to miss the train altogether. Some of them continue to focus, successfully, on the traditional PC market, like the Chinese company Lenovo, whose boss Yang Yuanqing likes to talk of a “PC-plus era.” A big fish like Hewlett-Packard, however, can hardly change overnight. For years, the US giant worked on perfecting its business of selling computers, complementing them with extras like printers and offering services for such equipment. It was a perfect long-term relationship with customers, or so HP managers thought.

HP reached the top of the industry 10 years ago through the expensive purchase of rival PC maker Compaq.

Change within the sector, however, threw them off balance. Their hardware sales dropped, their software business failed to grow fast enough, payment for acquisitions like security service provider SonicWall was still pending.

Prospects are good once the payroll is reduced, and share prices rose more than 3 per cent Thursday.

While Apple is surfing the mobile wave with the iPhone and iPad and setting trends in the notebook computer market with the MacBook, Hewlett-Packard does not even have smartphones and tablets on offer.

HP bought the smart phone pioneer Palm in 2010, but the management opted to close the company soon afterward, because it was uncompetitive.