It was a classic case of good news and bad news for the PC industry in the recent Gartner annual shipments report.

The good news was PC shipments were up 14.3 percent from 2009. The bad news was that number was down from an original forecast of a 17 percent increase, made back in September. The forecast for 2011 PC shipments was also down from September's projection when an 18.1 percent increase was predicted. Gartner has now predicted the increase will be at 15.9 percent over this year with 409 million units projected to be shipped.

George Shiffler, research director at Gartner, said the industry suffered from a weaker than expected third quarter this year and economic concerns in the U.S. and Western Europe surrounding the holiday season. He said shipments of PCs on the consumer side were supposed to be at a 20.6 percent increase from last year, now it's 17.4 percent. On the enterprise side, Gartner expected an increase of 13.7 percent, and it ended up being an 11.5 percent increase.

PCs are still seen as necessities, but the PC industry's inability to significantly innovate and its overreliance on a business model predicated on driving volume through price declines are finally impacting the industry's ability to induce new replacement cycles, Shiffler said.

He also said the concern that tablet computers could impact the overall number of PCs shipped is legitimate, but it's more of a long term issue. He said by 2014, the PC market will be 10 percent smaller than it is today because of tablets and other devices.

Longer term, there are a lot of potential disruptions. There are a lot of alternatives to PCs: smarter smarthpones, media tablets, a host of virtual desktops. You don't need a fat client, like a traditional PC, you can use a thin client or repurposed PC. It darkens the longer term outlook for PC growth, Shiffler said.

However, despite some degree of negativity surrounding the PC industry, Shiffler sees the industry responding to the oncoming onslaught of tablets with a more appealing form factor of their own to keep it relevant. He also said emerging markets continue to be a bright spot for the industry, even though China, one of the highest growth spots for the industry, did not do as well as expected this past year.