Global PC Sales Drop as Industry Faces Layoffs

24/7 Wall St.

Meg Whitman recently said there would be no huge layoffs at Hewlett-Packard Co. (HPQ). However, she can only look so far into the future, and her vision eventually will have to take into account the plunging sales of personal computers (PCs). The capacities of the software, chip and computer maker industries are too large, and that means they will need to be cut soon.

Gartner released a new report on PCs shipped in the third quarter of this year. The results cannot be seen as any better than a disaster:

Worldwide PC shipments totaled 80.3 million units in the third quarter of 2013, an 8.6 percent decline from the same period last year, according to preliminary results by Gartner, Inc. This marks the sixth consecutive quarter of declining worldwide shipments.

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Hewlett-Packard, Lenovo and Dell Inc. (DELL) might be cheered by very small ticks up in market share, but any optimism is an illusion. The chance for better sales in developed markets has died. Inexpensive Google Inc. (GOOG) Android-powered tablets have taken a primary place in emerging markets.

Based on the employee size of the industries that are dominated by the PC companies, led by Microsoft Corp. (MSFT) and Intel Corp. (INTC), there are too many workers to serve a collapsing market. That will only become a more significant matter as PC shipments decline by nearly double digits. And the PC companies have too small a stake in the tablet and smartphone markets for them to rekindle falling sales. The center of the computing industry has shifted to Apple Inc. (AAPL), Qualcomm Inc. (QCOM) and Samsung. The hold of these companies on the sales of a new generation of machines is as strong as Microsoft and Intel had on the PC industry only three or four years ago.

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How many employees is too many in the PC sector? Among the leaders, the total worker base runs into the hundreds of thousands. That is far, far too large a figure.

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