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PC-mageddon

NEW YORK ( TheStreet) -- The end of a technology era can be slow or sudden.

There are still mainframes. Minicomputers hung around for years after PCs and networks. Somewhere in this land of ours, someone is running a Novell LAN.

But in consumer markets, change can happen much more quickly. Back in the day the IBM PC killed the CP/M operating system very quickly. (CP/M was very similar to MS-DOS, but it wasn't.) Smartphones killed off most of the feature phone market in a very few years.

And so it is with the PC.

New research from IDC shows consumers have definitely turned the corner on this. Tablets will outsell laptop PCs this year, and will outsell all PCs in 2015, the company said.

Another turn has already happened in tablet size, according to IDC.

Just two years ago nearly three-quarters of all tablets were eight to 11 inches on the diagonal, like the 9.7-inch Apple (AAPL) iPad 2. Now, over half are eight inches or smaller, like the Amazon (AMZN) Kindle Fire and Samsung "phablets" like the Galaxy Note 2, which double as a phone. Phone + tablet = phablet! (The iPad Mini barely breaks into this market at 7.9 inches.)

This news is much worse for companies like Microsoft (MSFT), Hewlett-Packard (HPQ) and Dell (DELL). IDC said just in December that 172.4 million tablets would be sold this year. The new number is 229.3 million.

To make things even worse for Microsoft and HP, savvy consumers will note that they tried, and failed, to sell tablets for more than a half-decade before the iPad was even born. ( Here's a YouTube video on that from 2003.)

There are some serious implications for the rest of the market in the accelerating trend:
  • Individuals are going to be creating less content and instead curating photos, videos and Web pages because tablet keyboards are horrible. Less Typepad, more Tumblr.
  • Forget wired networks. Wireless is now the only way. Airports, hospitals and office buildings will be beefing up their router networks, and even homeowners may now have multiple routers.
  • Software applications like browsers are out. Apps that access Web sites as services are in.
  • The big trend in the office is BYOD, for Bring Your Own Device.
  • Tablets accelerate the cloud trend because there is less chip-based storage on a tablet than there is disk-based storage on a laptop.

The investment implications are even more obvious. If Windows 8.1 can't stop the rot, Microsoft is a dead company walking. Apple doesn't need a cheap iPhone so much as it needs a phabulous phablet. Amazon should go from strength to strength, while HP and Dell had better get on the phablet bandwagon now or they will become irrelevant.

Just last year HP was running an ad for its Ultrabook PCs telling people at an airport to "get off the floor" because the new laptop had more battery life. ( Here it is at YouTube.)

Suddenly, that ad seems quaint because you hold a phablet in one hand and manipulate it with a stylus in the other, and because tablets -- which have no moving parts -- also have longer-lasting batteries. There are no more cords and many can be recharged through a USB port.

When the technology world changes, it can change all at once. Technology investors need to take note of that.

At the time of publication, the author was long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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