Dell (DELL) Earnings: Has The PC Had Its Day?

Dell’s earnings dropped 48% last quarter and now it will probably fire more people. The numbers were not a surprise. Independent research shows PC sales falling around the world as the recession sets in. Earnings from Hewlett-Packard (HPQ) and Lenovo have confirmed that. There is even concern that sales of the popular Apple (AAPL) Mac may drop.

But, the demise of the PC may not simply be because of the recession. Consumers and businesses may turn to other devices to write, create documents, send data and access the internet. Right now, they are handheld smartphones and netbooks. They have drawbacks which may be going away.

The first disadvantage smaller electronic devices have is their computing power. Processors for these products don’t match those in PCs. But, Intel (INTC) is among the companies working on high-powered chips for small devices. It knows that as PC sales falter, its current business of providing x86 chips will start to fall apart.

The other drawback to handhelds and netbooks is connection speeds to the internet. When they are linked up to WiFi, they can take advantage of broadband. But, out of range of those signals, they have to rely on slower 3G. The cellular industry is in the midst of solving that problem with a build-out of “4G” networks which will run as fast as the fastest landline broadband.

The advantages the PC had in the past are quickly going away.

Douglas A. McIntyre