Sales Of the PC Fall on Hard Times

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Jae C. Hon / AP

A new netbook at a trade fair.

During the last half of the 20th Century every family wanted to have a car, and most bought one. In many cases they got two or three. The automobile was a status symbol, and a symbol of freedom, that was more than matched by its utility.

Some time around the 1970s, the car business had its first unimaginable crisis due to big cars and expensive gas. Since those car companies didn't learn anything from that experience, there have been episodic auto sector crises since then. And the whole world knows now what this inability to learn from their mistakes has done to the car companies. (See the 50 worst cars of all time.)

In the 1990s, the PC started to become a part of most American homes, and businesses. It was remarkably useful and it was a source of endless amusement and another kind of freedom, the freedom to communicate 24/7. In addition, the PC was a relatively safe way to occupy the under-aged. Video game sales ignited on the PC before the game console was commonplace.

PC sales have started to fall year-over-year due the bad economy and the resulting change in the spending patterns of most of the population. According to the AP, "Global shipments of personal computers posted their first quarterly decline in six years during the last three months of 2008."

As might be expected, sales in the U.S. fell more sharply than most anywhere else, down 3.5%. But, a huge number of American homes have more than one PC. The need to replace them is falling as the greater processing power makes it unnecessary for new machines to be purchased as frequently. And, to top that off, people do not want to spend $1,000 when money is tight.

The question about the PC market is whether it will ever completely recover. Cheap and functional cars have been in vogue for several years. PC consumers are moving to relatively inexpensive netbooks and smartphones. The margins on a $300 netbook don't match those of a $1.500 laptop with a dual processor and special video chip. (See TIME's Top 10 gadgets of 2008.)

The best years of being in the PC business may be over.

Douglas A. McIntyre

See pictures of vintage computers.

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