Of course, many AAA games are still doing quite well. Just last week. Call of Duty: Modern Warfare 2 launched with the biggest entertainment opening of all time, selling about five million copies across platforms and pulling in about $US310 million in a single day. [Silicon Alley Insider via Kotaku]

The 2% figure is extrapolated from NPD less direct assessment:

[A]pproximately 12 percent of all U.S. computer owning households own an Apple computer, up from 9 percent in 2008. While Apple ownership is growing, those households are decidedly in favour of mixed system environments. Of those 12 percent, nearly 85 percent also own a Windows-based PC.

At first glance, these stats almost seem wrong, but when you start think about it, they make sense: The survey polled “households”, which on account of grandma’s Compaq or your roommate’s gaming PC, clobbers the exclusivity figure. (I live in what any reasonable person would call a “Mac household”—three people who use Macs almost exclusively—but that little Acer netbook sitting on the table means we’re not.)

Plus, PCs are cheap and they linger, and Macs, being pricier, tend to find their way into richer households, where more than one computer is almost a given. That, combined the fact that most Macs sold are laptops, and therefore a little more likely to be a supplemental computer, makes the 2% figure look a little less crazy, but still, 2%? Fanboys, you’re slacking. [NPD via Macrumors]

I say this as a guy who was baptised into the tech world with a desktop; who still obsessively follows the latest PC components from Intel, Nvidia, ATI and the like; who has built, fixed or upgraded more towers than I care to remember; and who, until a few years ago, was an avid PC gamer. As someone who would be, by most measures, a desktop-PC kinda guy, I just can’t go on pretending there’s a future for them.

The State of the Industry
This is more than a hunch; a grim future is borne out by the numbers. A week ago, iSuppli issued a broad report on the state of the PC industry. The leading claim was predictable: The PC industry was experiencing lower-than-expected quarterly sales—down about 8% from the same time last year. This included laptops, and made sense, because the whole economy’s gone to hell, right? People aren’t buying computers.

Except that’s not quite what’s happening. In the same period, laptop shipments—already higher than desktop shipments on the whole—grew 10% over last year. Desktops were entirely to blame, dropping by an astounding 23%. That’s not decline—it’s free fall.

Stephen Baker, an analyst for industry watchers NPD, shared with me a wider picture of how retail PC sales break down. The way he put it made measuring the rise and fall of sales percentages seem dumb—there really aren’t any sales to lose: “In US retail, 80% of sales are notebooks now,” he said. “Start throwing in stuff like iMacs and all-in-ones”—which share more hardware DNA with laptops and netbooks than traditional desktops—”and it gets even higher.”

The Buyer’s Dilemma
To understand why this is happening doesn’t take anything more than a little empathy. Put yourself in the shoes of any number of potential consumers, be it kids, adults, techies, or luddites. In virtually any scenario, a laptop is the sensible buy.

Take my dad. Despite spending three decades in front of commercial jet instrument panels, his relationship with computers is, at best, strained. When he came to me a few months ago asking for advice about a laptop to replace his desktop, I assumed it was a just a whim, based on what he saw happening around him. It wasn’t, at all. As someone who uses a computer mostly for news, email, music, etc—like a significant part of the population—he was actually being intensely rational. A laptop would do everything he needs simply and wirelessly, with a negligible price difference from a functionally equivalent desktop. If he wants a monitor, keyboard and mouse, he can just attach them. Choosing a desktop PC wouldn’t just be a not-quite-as-good choice—it’d be a bad one.

The TradeoffsLet’s look at mainly stock examples taken (hastily) from Dell’s current product line. Their configurations could be tweaked and changed to make desktops look slightly better or slightly worse, but we chose them because they are typical budget-minded consumer choices. We are not talking about workstations, and we’re not talking about all-in-ones, because if anything, they are keeping this category alive. When it comes to pure household computer buying, you can hunt for deals all you want, but laptops and desktops are more closely paired than you might expect.

That’s not to say that there aren’t noticeable tradeoffs. Graphics performance, although I wasn’t specifically angling for that with these configurations, is generally better in a desktop. Likewise, hard drives—being that desktops use larger, cheaper 3.5-inch units—are faster and more capacious across the board. Greater amounts of RAM can be had for less in a desktop, the optical drives can be slightly faster, and the ports for those and other drives can be used for expansion.

But these tradeoffs aren’t nearly as pronounced as they once were, nor are they as consequential. On account of the huge demand and sales volume, newer mobile processors have become a hotbed for innovation, now rivaling most any desktop processor, and mobile graphics engines—though still markedly inferior to dedicated desktop cards—have improved vastly in recent years, to a point where most consumers are more than satisfied.

And if you really look out for them, there are some amazing deals to be had on new notebooks. (Look at Acer’s 15-inch, 2.1GHz Core 2 Duo, 4GB DDR3 RAM laptop with 1GB GeForce GT130 graphics card and Blu-ray for $US750, and then try to build the equivalent in a desktop at the same price.)

The important takeaway here is that the performance sacrifice you make in owning laptop is minimal, and mitigated, or even outweighed, by its practical advantages. Want a bigger screen on your notebook? Hook it up your HDTV. Want more storage? Buy a cheap, stylish bus-powered external USB drive. Want to use your desktop on the toilet? Good freakin’ luck.

The Fall of the Gaming PC
But to say that the average user doesn’t have any reason to buy a hulking beige box isn’t that controversial, and even borders on obvious. The real, emotional, diehard support for the form factor is going to be found elsewhere anyway. I mean, hey, what about gamers? Have you ever tried to play Crysis on an Inspiron? Let’s jump back to the numbers.

Last year saw a huge 26% increase in game sales across platforms, powered mostly by Xbox 360, Wii and Nintendo DS sales, according to NPD. Breaking that number down, we see PC game sales down by 14%. That decrease barely even registered in the broader scheme of things, since total PC game sales amounted to just $US700m of the industry’s $US11b take. This year is looking even worse. You know what, let’s just call this one too: PC gaming? Also dead.

As the laptop is to my old man, the console is to the gamer. Just a few years ago, buying—or just as likely, building—a high-end gaming PC granted you access to a rich, unique section of the gaming world. Dropping a pile of cash for ATI’s Radeon 9800 to get that precious 128MB of VRAM was damn well worth it, since there was no other way to play your Half Life 2 and your Doom 3. PC titles were often demonstrably better than console games, and practically owned the concept of multiplayer gaming—a situation that’s changed, or even reversed, since all the major consoles now live online. We even spotted a prominent PC magazine editor (and friend of Giz) copping on Twitter to buying an Xbox game because it has multiplayer features the PC version doesn’t. Yes, things are different now.

NPD’s Baker sees it too: “Go back two years ago and think about all the buzz that someone like Falcon or Alienware or Voodoo was generating, and how much buzz they generate now, that might be a little bit telling.” He adds, “There’s considerably less interest in high powered gaming machines.” They’re luxury items in every sense, from their limited utility to their ridiculous price to their extremely low sales.

A Form Factor on Life Support
But no matter how irrational a choice the desktop tower is for the regular consumer, sales won’t hit zero anytime soon. As we’ve hinted, much of this can be explained by simple niche markets: Some businesses will always need powerful workstations; older folks will feel comfortable with a familiar form factor; some people will want a tower as a central file or media server; DIY types will insist on the economy and environmental benefit of desktop’s upgradeability; and a core contingent of diehard PC gamers, despite their drastically thinning ranks, will keep on building their LED-riddled, liquid-cooled megatowers until the day they die.

Baker sees another factor—less organic, more cynical—that’ll keep the numbers from bottoming too hard. “Desktops are a lot more profitable than notebooks for a lot of reasons, not the least of which is that big shiny monitor, which has a nice margin attached to it. For the retailers, people tend to buy a lot more peripherals and accessories when they buy desktops than when they buy notebooks.” Even if the volumes are ultra-low and concept is bankrupt, retailers are going to keep bloated, price-inflated desktops and desktop accessories out there on the sales floor until they’ve drained every last dollar out of them.

You’ll see plenty of desktop towers for years to come, in megamarts if not in people’s homes. You’ll still hear news about the latest, greatest graphics cards, desktop processors and the like. Enthusiasts and fansites will stay as enthusiastic and fanatical as they’ve ever been. These, though, are lagging indicators, trailing behind a dead (or maybe more accurately, undead) computing ideal that the computer-using public has pretty much finished abandoning.

The average Mac desktop sells for about US$1,000 more than the average PC desktop, which sells for a mere US$550.

“But wait,” you say, “that’s because people interested in higher-end machines buy Apple, while cheap idiots buy PCs.” Eh, maybe. But that doesn’t explain away the discrepancies.

Specifications often vary sharply for these systems, with Apple often focusing on faster processors than some rivals in notebooks but at the expense of memory and hard drive space. Its insistence on using mobile processors and custom designs for desktops, however, has created feature discrepancies where a Dell Inspiron 518 tower nearing the US$700 mark features two more processor cores, three times as much memory, and twice the hard drive space of an US$1,199 entry-level iMac despite both coming with near-equivalent LCDs.

While the average price for Windows-based systems is described in the NPD data as having largely flattened and unlikely to drop further in the near future, the disparity between these and Macs has only widened in the last few months, according to eWeek. Apple’s general policy of refusing to alter prices until its next hardware revision has reduced the value of its systems relative to Windows competitors.

So while Apple’s marketshare has gone up quite a bit in the last few years, analysts don’t think they’ll be able to keep up the growth with prices so much higher than their PC counterparts. There are only so many video editors, bloggers and rich fanboys in the world, after all. Sooner or later, they’ll need to appeal to those cheap idiots as well. [Electronista]

CUPERTINO, California—April 3, 2008—Apple® today announced that the iTunes® Store (www.itunes.com) surpassed Wal-Mart to become the number one music retailer in the US, based on the latest data from the NPD Group*. With over 50 million customers, iTunes has sold over four billion songs and features the world’s largest music catalog of over six million songs.

“We launched iTunes less than five years ago, and it has now become the number one music retailer in the world,” said Eddy Cue, Apple’s vice president of iTunes. “We are thrilled, and would like to thank all of our customers for helping us reach this incredible milestone.”

*Based on data from market research firm the NPD Group’s MusicWatch survey that captures consumer reported past week unit purchases and counts one CD representing 12 tracks, excluding wireless transactions. The iTunes Store became the largest music retailer in the US based on the amount of music sold during January and February 2008.

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone.

Apple also boasts 50 million iTunes customers and over 4 billion tracks sold. It’s a nice celebratory email, based on solid facts, but it hides some serious insecurities: things might not remain this rosy for long.

More and more people will soon discover Amazon’s download store, with higher-res, lower-priced non-DRM MP3s, plus automatic loading into iTunes. Many iPod owners will also be drawn to Wal-Mart’s own increasingly busy download department, though in our Battlemodo we decided Amazon was the better bet.

You can’t get just anything DRM-free yet, and iTunes still has some sweet exclusives, but with stronger support from all four major labels, Amazon is bound to overtake iTunes by and by, and Wal-Mart may easily expand its lead.

Apple’s release:

iTunes Now Number Two Music Retailer in the US

iTunes Customers Top 50 Million

CUPERTINO, California–February 26, 2008–Apple® today announced that iTunes® (www.itunes.com) is now the number two music retailer in the US, behind only Wal-Mart, based on the latest data from the NPD Group*. Apple also announced that there are now over 50 million iTunes Store customers. iTunes has sold over four billion songs, with an incredible 20 million songs sold on Christmas Day 2007 alone, and offers the world’s largest music catalog of over six million songs from all of the major and thousands of independent labels.

“We’d like to thank the over 50 million music lovers who have helped the iTunes Store reach this incredible milestone,” said Eddy Cue, Apple’s vice president of iTunes. “We continue to add great new features like iTunes Movie Rentals to give our customers even more reason to love iTunes.”

Last month, Apple launched iTunes Movie Rentals featuring movies from all of the major movie studios including 20th Century Fox, The Walt Disney Studios, Warner Bros., Paramount, Universal Studios Home Entertainment, Sony Pictures Entertainment, Metro-Goldwyn-Mayer (MGM), Lionsgate and New Line Cinema. Users can rent movies and watch them on their PCs or Macs, all current generation iPods**, iPhone™ and on a widescreen TV with Apple TV®. iTunes Movie Rentals will offer over 1,000 titles by the end of this month, including over 100 titles in stunning high definition video with 5.1 Dolby Digital surround sound which users can rent directly from their widescreen TV using Apple TV.

iTunes 7.6 is available as a free download at www.itunes.com. iTunes Movie Rentals are available in the US only and are $2.99 (US) for library titles and $3.99 (US) for new releases, and high definition versions are priced just one dollar more with library titles at $3.99 (US) and new releases at $4.99 (US). Movie rentals from the iTunes Store for Mac® or Windows require iTunes 7.6. iTunes Movie Rentals require a valid credit card with a billing address in the country of purchase.

*Based on data from market research firm the NPD Group’s MusicWatch survey that captures consumer reported past week unit purchases and counts one CD representing 12 tracks, excluding wireless transactions. The iTunes Music Store became the second-largest music retailer in the US after Wal-Mart, based on the amount of music sold during 2007.

**Movie rentals work on iPod classic, iPod nano with video and iPod touch.

During the week that is being singled out, both Blu-ray disc players and software were being given away for free with the purchase of 1080p TVs. It is also important to note that the instant rebate promotions that had previously netted Toshiba’s players’ MSRP’s to US$199 and US$249 had actually ended on Jan. 5th – causing an increase in HD DVD’s MSRP back to US$299 and US$399 during that same week.

It’s true, you should never take the evidence of one fluke week as gospel truth, but we’re not sure this defence is going to help HD DVD sales much, despite what Toshiba is calling “very positive sales trends” at the new US$149 and US$199 price points. (You know, the trends would be even higher if they were just free by the side of the road, but that doesn’t make it a good move.) God forbid this format war actually comes to a freakin’ end already! [Toshiba]