Silicon Valley's old guard is waking up to the fact that the era of consumer PC may be in its twilight, accelerating the need to invest and adapt to rapidly changing tastes.

This week's earnings from the giants of technology had one thing in common: they underscored yet again how consumers are increasingly shunning desktop PCs and going mobile.

Intel, which had argued that pessimistic expectations about the market were out of whack, reduced its 2011 PC forecast. Microsoft Windows sales, that reliable indicator of PC market strength, fell short of expectations for the third straight quarter.

And Apple Inc, which single-handedly showed with its iPad that many consumers are more than happy with an unladen, light and mobile computer, obliterated all estimates by selling a whopping 9 million tablets.

The desktop, at least for consumers, probably doesn't have a great future, and the iPad and similar tablets can deliver a lot of the functionality of a laptop, said Tim Ghriskey, chief investment officer of Solaris Asset Management.

Worldwide shipments of smartphones are already overtaking PCs, and by 2015, more than 300 million tablets will ship -- not far behind 479 million PCs expected to be made, according to IHS iSuppli.

To be sure, there's time left for PCs. Adoption and sale continue to grow rapidly in emerging markets and among corporate users. But even there, increasingly powerful smartphones are entrenched and tablets are creeping in.

Research in Motion's Playbook -- despite poor reviews as the minnow of the tablet market -- became the first to win U.S. government certification.

Judging by share performances, Wall Street is taking notice as well. Shares of Apple reached a record this week and are up 21 percent in 2011. Intel has gained 10 percent, a bit better than the broader market, but Microsoft is down about 3 percent.

In January, the board of Advanced Micro Devices, frustrated about the company's lack of progress in mobile computing, forced out then-Chief executive Dirk Meyer. It is still searching for a candidate to spearhead a major push into mobile.

It's important for us to keep our eyes and ears wide open. This compute space is evolving and our technology is evolving so that we can take it beyond the traditional segments we serve today, AMD Chief Financial Officer Thomas Seifert, standing in as CEO, told Reuters.

HYPER-COMPETITIVE

Amid economic uncertainty and boding poorly for the rest of the year, PC sales edged up just 2.3 percent in the second quarter, according to tech research firm Gartner, well below earlier projections.

Top executives argued that personal computers still shine. But they also say they're hurrying to adapt to changing consumer preferences, with Microsoft stepping up its mobile strategy by creating future versions of Windows just for tablets.

ARM Holdings' energy-efficient technology now all but dominates mobile computing, but Intel and AMD are increasing their focus on processors suited for smaller devices. They're pushing manufacturers to use their chips to build laptops that are in many ways touchscreen tablets.

The market for processors used in smartphones and tablets is about $6.7 billion this year, MKM Partners analyst Daniel Berenbaum estimates. That's just 12 percent of Intel's expected 2011 revenue, but that proportion is growing.

Intel is speeding up plans to use its most cutting-edge technology to manufacture chips aimed a mobile devices, and Chief Executive Paul Otellini said this week the company would be hyper-competitive in getting its silicon into tablets running Microsoft's upcoming version of Windows.

In the next generation it's going be hard to tell the difference between a tablet and a netbook, said Stifel Nicolaus analyst Kevin Cassidy. To me a tablet is just a netbook that has a solid-state drive and a touchscreen.

For now, PC-reliant companies can take comfort in under-saturated markets like oft-mentioned China -- the world's second-largest PC market and one where millions remain unfamiliar with computing in general.

In the second quarter, PC shipments in the United States fell 5.6 percent, year over year, while China's PC market grew 10.9 percent, according to research firm Gartner.

Despite reducing its 2011 PC sales outlook, Intel's revenue forecast for the September quarter came in higher than expected. For a second quarter, analysts underestimated the demand for PCs in China and other emerging markets.

Consumers in the United States and Europe often have at least one PC at home and increasingly choose to buy gadgets like tablets over a new laptop. But millions of families in developing countries are increasing their incomes and are reaching the point of being able to buy a computer.

And despite falling Windows sales, Microsoft's Office sold well in the second quarter, underscoring the importance of PCs to corporations, something unlikely to change radically soon.

For now, investors should heed Intel's consistently estimate-beating quarterly results and not sell the company's stock based on worries about what the PC market and mobile markets will look like in a decade, Berenbaum argued.

What's going to happen in 10 years? I have no idea, but the market doesn't know either and the market isn't going to be able to discount what's going to happen in 10 years. This market can barely discount 10 minutes, Berenbaum said.

(Editing by Edwin Chan and Steve Orlofsky)

China Aging