Tech giants tackle PC market slump with hybrid tablets push

News 17 Jan, 2013

The growing demand for tablet devices has prompted many vendors to try and ape their design with their latest slew of laptops.

PC makers are churning out hybrid and "convertible" laptops to rival tablet devices and win sales.

Many of the laptops to be unveiled around the world in coming months will be hybrids or "convertibles" - morphing easily between portable tablets and full-powered laptops with a keyboard, industry analysts say.

The wave of hybrids comes as Intel and Microsoft, long the twin leaders of the PC industry, prepare to report results this week and next.

Wall Street is predicting flat to sluggish quarterly revenue growth for both, underscoring the plight of an industry that has struggled to innovate.

The hybrid model is very compelling for a lot of users.

In 2013, some are hoping that will change.

With the release of Microsoft's touch-centric, re-imagined Windows 8 platform in October and more power-efficient chips from Intel, PC makers are trying to spark growth by focusing on creating slim laptops with touchscreens that convert to tablets and vice versa.

Microsoft, expanding beyond its traditional business of selling software, is expected this month to roll out a "Surface Pro" tablet compatible with legacy PC software developed over decades.

That's a major selling point for corporate customers like German business software maker SAP, which plans to buy Surface Pros for employees that want it, said SAP Chief Information Officer Oliver Bussmann.

"The hybrid model is very compelling for a lot of users," Bussmann told Reuters last week. "The iPad is not replacing the laptop. It's hard to create content. That's the niche that Microsoft is going after. The Surface can fill that gap."

Apple's iPad began chipping away at demand for laptops in 2010, an assault that accelerated with the launch of Amazon's Kindle Fire and other Google Android devices like Samsung's Note.

With sales of PCs falling last year for the first time since 2001, this year may usher in a renaissance in design and innovation from manufacturers who previously focused on reducing costs instead of adding new features to entice consumers.

"People used to be able to just show up at the party and do well just because the market was going up," Lisa Su, a senior vice president at Advanced Micro Devices, which competes against Intel.

"It's harder now. You can't just show up at the party. You have to innovate and have something special."

At last week's Consumer Electronics Show in Las Vegas, devices on display from Intel and others underscored the PC industry's plan to bet more on convertible laptops.

Lenovo's North America President Gerry Smith told Reuters last week that over the holidays he sold out of the company's "Yoga", a laptop with a screen that flips back behind its keyboard, and the "ThinkPad Twist", another lightweight laptop with a swiveling screen.

Intel itself showed off a hybrid prototype laptop dubbed "North Cape", housed in a thin tablet screen that attaches magnetically to a low-profile keyboard. And Asus showed a hefty 18-inch, all-in-one Windows 8 PC that converts to a tablet running Google's Android operating system.

Lenovo and Asus, which have both won positive reviews for their devices in recent months, increased their PC shipments by 14 percent and 17 percent respectively last year, according to Gartner.

"The number of unique systems that our partners have developed for Windows has almost doubled since launch. That gives an indication of how much innovation is going into the PC market," Tami Reller, chief financial officer of Microsoft's Windows unit, told Reuters.

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