PCs: More than 1 billion served

The PC just turned 1 billion.

Approximately 1 billion PCs have been shipped worldwide since the mid-'70s, according to a study released Sunday by consulting firm Gartner. Seventy-five percent of these machines have gone into professional, or work-related, environments, while the other 25 percent have been for personal, or home, use. Approximately 81.5 percent of PCs shipped have been desktops.

The next billion, though, should ship much more quickly. Declining prices, the growth of the Internet, and the rapid adoption of computers in the developing world will likely double the number of PCs shipped by 2007 or 2008.

"This demand exists because of the power of the PC to leverage intellectual capital, unlocking the capabilities of individuals to succeed and companies to profit," Gartner analyst Martin Reynolds wrote in a report. "However, expanding the market will require that PCs become smaller and even less expensive than they are today, while delivering greater functionality and performance."

Indeed, small will be big, according to Christine Riley, who heads up the People and Practices Research Group at Intel, a small organization of social scientists, designers and anthropologists that studies how humans interact with machines.

In India, for instance, one of the largest future markets for the machines, PCs do not sit on desks in open view. Consumers there want to keep more strict boundaries between work and home life, she said, and the PC is considered a piece of office equipment. As a result, owners wheel them around on tea carts so they can be kept out of living areas. Smaller, less intrusive PCs in this market are inevitable.

My, how you've grown The PC has come a long way since the days of the Altair 8800. PCs shipped in 1977 48,000 PCs shipped in 2001 125 million PCs currently in use 500 million plus Total shipped to date 1.014 billion Source: Gartner

Broadband will help increase shipments, too, both Riley and Reynolds said. Studies have shown that broadband subscribers in the United States use their PCs more often and for more functions than do consumers with dial-up accounts. Additionally, broadband users think of their PCs as a necessary utility.

"People stop referring to their computer," she said. "The telephone is transparent. You don't say, 'I'm going to go use my telephone.'"

Historically, increased PC usage has prompted upgrade cycles and multiple PC ownership.

So far, most of the PCs shipped have gone into developed nations. The United States has received 38.8 percent, or 394 million, of PCs shipped. Nearly 25 percent have gone to Europe, while only 11.7 percent have gone into the Asia-Pacific region, the fastest-growing market today.

In terms of design, the vast majority of PCs shipped have been desktops. Only 16.4 percent of PCs shipped were notebooks, and only 2.1 percent were PC servers, or servers based around the chip designs originally devised by Intel. These two markets, though, are expected to be the profit centers for manufacturers in the future.

The billionth PC likely shipped in April 2002.

1975, P.C.
In the past 28 years, the industry has changed dramatically. The PC revolution essentially began in January 1975 when MITS began selling the Altair 8800. The Altair kit sold for $421, or $621 assembled. At the time, AMC's Gremlin automobile had just completed its most successful year and Captain Beefhart and the Magical Band were in the middle of their Bongo Fury tour.

Technically, home PCs go back to the Simon, a mechanical brain that could be built out of commonly available parts. But the Altair was the first commercially successful PC.

Other machines rapidly followed from companies such as Zenith, Apple Computer, Northgate, Zeos and Commodore. All these companies once ranked as "top five" PC manufacturers, according to Gartner. Only Apple is still prominent, ranking as the ninth largest manufacturer in 2001.

While the PC was primarily sold to consumers at first, shipments shot up dramatically, from 609,000 to 1.6 million, in 1981 with the release of the IBM PC, the first PC successfully targeted at the business market. Double-digit growth in shipments remained common for 20 years. In only two years--1985 and 2001--have shipments declined.

Although more gradual growth is expected in the future, double-digit growth could return if upgrade cycles, economic conditions and developing nations synchronize at some point, Reynolds wrote.

PC shipments by region Region shipment share U.S. 38.8% W. Europe 24.6% Asia-Pacific 11.4% Japan 9% Latin America 4.1% Rest of world 11.8% Source: Gartner

There are bumps on the road to continued growth, though. Demand will likely slacken if existing carriers attempt to throttle broadband deployment. Telecommunications carriers in some regions of the world want to retain the minutes-per-use business model and dread the flat-rate pricing of broadband systems, according to Gartner. Because existing carriers are often backed by the government, or at the least are politically well connected, ill-chosen regulations could hinder proliferation.

Similarly, content-protection schemes that erode hardware performance could hinder demand by making PCs less versatile.

Also, even though prices have drastically dropped for years, PCs are still too expensive for the developing world.

"This (pricing) will be the greatest challenge for the industry during the next five years," Reynolds wrote.