The death of the PC; Graph Search big business for Facebook; Dell going private?

After a week of speculation, Facebook last week revealed what it had been building - Graph Search, a “social search engine” that allows users to search Facebook’s database of friends and interests using specific queries.

Facebook CEO Mark Zuckerberg suggested at the reveal that one would be able to search for “music liked by people who like Mitt Romney”. Other examples included “people who have been product managers and who have been founders”, “languages my friends speak” and “NASA Ames Research Center employees who are friends of Facebook employees”.

According to Facebook’s own Graph Search page, “With Graph Search, you can look up anything shared with you on Facebook, and others can find stuff you’ve shared with them, including content set to Public.”

Analysts were quick to comment on the reveal, and many saw potential dollar signs for Facebook.

“BofA Merrill Lynch analysts estimated Facebook could add [US]$500 million in annual revenue if it can generate just one paid click per user per year, and raised its price target on the stock by [US]$4 to [US]$35,” a Reuters article said.

However, the same analyst went on to say that Graph Search was no threat to Google web search.

Dell rumours

PC vendor Dell may be going private, if anonymous sources quoted by US news agency Bloomberg are to be believed.

Bloomberg last week reported that “two people with knowledge of the matter” said the company is in buyout talks with private-equity firms.

Dell, which had a market value of US$18.9 billion on 11 January, lost almost a third of its value last year. Going private would afford the company time to turn its fortunes around.

“The company essentially has to re-make itself by de-focusing on hardware and re-focusing on software and services. This would give the company more time to effect this turnaround,” said Ashok Kumar, an analyst at Maxim Group.

Founder Michael Dell stood aside as head honcho in 2004, with Kevin Rollins taking the position of CEO of the then successful company. Sales slipped and in 2007 Dell resumed control of the organisation. Since then, market share and stock prices have continued to fall.

The rising popularity of mobile devices like smartphones and tablets in the consumer and business realms - and the simultaneous drop in demand for traditional desktop PCs - is widely considered a primary contributor to the company’s poor fortunes.

The falling demand for PCs - and the simultaneous rising popularity of smartphones and tablets, which Dell attempted but failed to capitalise on - is widely considered a primary contributor to the company’s poor fortunes. Which leads us to our next story.

The death of the PC

Reports of declining sales of PCs came out of several analyst firms last week, leading many news outlets to once again declare the traditional personal computer dead.

First up, analyst firm Gartner revealed a “preliminary” report saying that global PC sales in the fourth quarter of 2012 were down 4.9% from the same period in 2011. The drop could not be explained by weak economic conditions alone, the firm said.

Mikako Kitagawa, principal analyst at Gartner, said that when it comes time to replace an older PC, consumers are turning to tablet devices instead of buying another traditional personal computer.

“Whereas once we imagined a world in which individual users would have both a PC and a tablet as personal devices, we increasingly suspect that most individuals will shift consumption activity to a personal tablet, and perform creative and administrative tasks on a shared PC,” Kitagawa said.

The trend was ushered in by 2012’s cheap tablets and will continue as tablets become the “primary consumption device” for users.

“On the positive side for vendors, the disenfranchised PCs are those with lighter configurations, which mean that we should see an increase in PC average selling prices (ASPs) as users replace machines used for richer applications, rather than for consumption,” Kitagawa said.

IDC later released its own “preliminary” report, which stated, “The Asia/Pacific (excluding Japan) PC market declined 2% in full year 2012 to reach 121 million units, recording a full year contraction for the first time.”

IDC placed blame for the decline on global economic weakness, with Avinash K Sundaram, senior analyst at the firm, saying that initiatives like Intel’s Ultrabooks and Microsoft’s Windows 8 “haven’t reinvigorated the PC market as much as the industry had hoped”.

“In light of this softness, IDC expects growth to remain muted in the upcoming years. However, we also must not forget that this is still a more than US$60 billion market in the Asia/Pacific (excluding Japan) region alone,” Sundaram said.

But consultancy Deloitte disagreed with the many death-focused headlines, predicting that despite the rise of smartphones and tablets, more than 80% of internet traffic will come from traditional PCs.

“Most people spend most of their time at work and when they’re working they’re in front of a PC,” Deloitte’s lead telecommunications partner, Stuart Johnston, is quoted as saying in an itnews piece.

Some tasks - such as typing documents greater than 500 words - aren’t suited to smartphones and tablets, he said, with users preferring to use a traditional PC and keyboard instead.

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