The Rising Influence of Rising Affluence

[DewDiligence]

PC market is barely breathing (Barron’s):

http://online.barrons.com/article/SB50001424052748703931404578593963335704842.html

Personal-computer shipments in the first half of this year were down 11%. IDC called the first quarter the worst in all the years it has tracked PC shipments. Gartner, meanwhile, pointed out that the second quarter made it five quarters in a row of year-over-year declines, the longest period of decline on record.

At 76 million units shipped last quarter, we're back to the level of PC shipments last seen in early 2008, heading into recession.

…what's important to people now is less the hardware and more the kinds of content and applications that can be used on these gizmos. We all want to watch TV on multiple screens, and we are all finding more ways to carry out our work—and play—on smartphones and tablets.

And that's the real problem for the PC. It can run any software you want, sure, but it doesn't lend itself to the kind of frictionless consumption of content—books, movies, music, and apps—that Apple's App Store and Google's Google Play shop offer. People want the ecosystem, and they're moving to non-PC devices in droves to frolic in that ecosystem.

The irony to all this, of course, is that plain-old PC names have been great stocks this year. Intel shares are up 15%, below the Nasdaq's 19% climb, but much of that is just in the last quarter or so. Microsoft is up 34%.

…Based on the weak PC market, it's clear that what's changed most for investors this year is sentiment, not fundamentals.