Analyst firm IHS published an important study last week. It predicts that, for the first time ever, PC shipments would drop year-over-year; for 2012, total shipments will drop 1.2 percent. IDC and Gartner agree, noting that third quarter PC shipments fell 8 percent. It's the steepest drop since 2001.
While it's clear that use of new form factors such as smartphones and tablets has been skyrocketing over the past few years, this study is the first that indicates that this growth, far from incremental, is taking share from the previously dominant form factor. Of course, some may not accept the study's findings, feeling that rumors of the death of the PC have been overstated. It may be the case, too, that the total number of PCs sold in 2012 won't really shrink but may, instead, end up showing modest growth.
Whether you accept the study's prediction or not, it's clear that the heady growth of PCs is over and this form factor now represents a mature market. Incremental growth in client use will shift to these new form factors.
What's crucial to understand, however, is that these form factors are just moving into their torrid growth phase, and the total client device market is going to explode well beyond common expectations. Put more simply, while PCs recently have been growing on the order of 5 percent or 10 percent per year, these new devices are growing at rates exceeding 100 percent; in a few years their growth will cause the overall client device market to be 500 percent or even 1,000 percent larger.
Mobile Users Compute 'With' Devices, Not 'On' Them
That growth is going to make the cloud computing phenomenon even bigger.
Why? It's simple. Smartphones and tablets are application consumption devices. People don't do computing on them, they do computing with them. While the data may emanate from the device (a digital photo taken with an iPhone app, for example), the computing for that app typically resides elsewhere—in the cloud.
I do far more computing with my iPad than I ever imagined, but the computing is of a different form than what I do with my laptop or desktop machine. I consume media (Netflix and Amazon Video), interact with apps (Feedly for RSS feeds, SlideShark to display presentations, and specialized apps to interact with different services like that from my local library system), and perform ongoing business functions such as reading email—but I am not, generally speaking, creating much data or content on the device.
The ultimate destination for my iPad apps is some cloud-based application. That's where the data and functionality reside. Every one of the apps I use drives remote computing in the cloud.
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All this doesn't mean PCs are going to disappear. They will still be preeminent data creation devices for people doing traditional applications such as word processing, spreadsheets and digital image editing. It just means that to forecast the total amount of computing to be done based on an assumed market size and assumed user profiles associated with PCs is to vastly underestimate the total amount of computing that is going to be done in the future.
Cloud Computing Market Bigger Than We Think
It also means that forecasts of the total cloud computing market size are wildly undersized. There are three reasons for this:
The most obvious one, which has just been examined, is that these devices encourage additional, incremental computing. Where once one finished "computing" and then watched TV, now one finishes "computing" and watches TV and "computes" by using a tablet to look at IMDB to learn more about one of the actors, to browse through Facebook to see if one's friends are watching the show (or to tell them they should be watching the show), to look through Yelp to see where to order dinner to eat while watching the show, and so on. Or, instead of watching TV, I do something else, but use a smartphone or tablet at the same time in an analogous fashion for that activity; for example, I go to a miniature golf course, shoot some video of my family playing and upload it to my Facebook page. These devices extend the timescale and geography of computing and increase the total share of stomach, so to speak, that computing represents.
Second, the "API-ification" of cloud-based applications means it is much easier to access them via smartphones and tablets, enabling new market niches to be addressed. I use a lot of public transportation when traveling and use a number of applications that consume data streams published by transit agencies. A few years ago I would have been forced to look online at an agency's website to make my plans, which would have been limited to the data in the published schedule. Now I can use a smartphone app that mashes up the schedule along with GPS data from individual buses or trains, and I can better calculate my plans—and adjust them in real time. This API-driven app world expands the scope of computing, which will result in an explosion of applications as new market niches get exploited.
Finally, the Internet of Things will transform the nature of computing. Most people are relatively short-sighted in extrapolating the trends in client devices, failing to see that the current trend is just one waystation on the journey of ever-smaller, ever-more powerful, ever-cheaper, ever-expanding number of devices. We are nowhere near the ultimate endgame of this journey, and the upcoming effect of small, powerful, cheap and numerous devices will serve to expand "computing well beyond how we think of it today. One example is the Nike+ Fuelband, which essentially turns the human body into a LAN, generating data about heart rate and activity level and using it as a motivational goal.
As the number of devices grows—Cisco Systems predicts 1 trillion devices by 2013; their timing may be wrong but their direction is dead-on—and as the amount of data they generate expands, the scale of cloud computing will grow beyond anyone's wildest guess. While writing this column, I came across an account of a startup building a robotic weeder that could cut pesticide use in agriculture. As these devices get rolled out into the (literal) field, each one will transmit scads of data regarding number and type of weeds, crop growth and so on. Again, more computing and more data.
Future Cloud Computing Volume Demands Will Be Tremendous
I believe the biggest problem the IT industry will face in the relatively near future is not gaining acceptance for cloud computing. That will come—not through "official" acceptance, mind you, but through the steady and accelerating tactical adoption and creation of individual applications that accrete until everyone acknowledges that it is now the quotidian mode.
Instead, I believe the biggest challenge for the IT industry will be growing computing infrastructure fast enough to handle all the computing driven by the factors outlined above. I'm not sure Amazon, Microsoft and Google, mighty as their technical competence and capital budgets are, will together be able to keep up with the burgeoning demand that all of us will create.
Of course, keeping up with unanticipated demand is a welcome challenge; despite the cries of "Apple didn't get the iPhone 5 launch right," which of us wouldn't love to switch places with them and have to deal with the problem of too many people thrusting money at us? Nevertheless, addressing the volume demands of cloud computing will be the challenge for the industry. Just wait and see.
Bernard Golden is the vice president of Enterprise Solutions for enStratus Networks, a cloud management software company. He is the author of three books on virtualization and cloud computing, including Virtualization for Dummies. Follow Bernard Golden on Twitter @bernardgolden.