PC Sales Decline Not as Bad as Expected

PC shipments have been on the decline. But if you want to look at the glass half-full, those declines aren't as bad as originally forecast.

IDC yesterday reported that 69 million PCs shipped for the first quarter of this year amounted to a 6.7 percent decline over the same period last year. Though that's the lowest number of PCs shipped for the quarter since 2009, this year's decline wasn't as sharp as IDC had originally forecast last fall when the market researcher had predicted volumes to drop by 8.2 percent.

The better-than-expected number -- if you do look at the glass half full -- came from a slower decline in the United States than other parts of the world, according to IDC Senior Research Analyst for PCs Rajani Singh. In the U.S. 14.2 million PCs shipped in the first quarter, a 1 percent decline over the same period last year, according to IDC. The strongest segment of growth was portables, notably in new categories such as new Bing PCs, Chromebooks, convertible PC-tablets and ultra-slim notebooks, according to IDC, which said desktop shipments were sluggish this quarter.

Gartner said desktop declines were in the double digits but figures won't be available for another few weeks, according to analyst Mikako Kitagawa. For its part, Gartner said it had forecast more moderate declines and it says shipments declined 5.2 percent. Gartner is also forecasting moderate PC growth for the years to come.

"The PC industry received a boost in 2014 as many companies replaced their PCs due to the end of Windows XP support. But that replacement cycle faded in the first quarter of 2015," Kitagawa said in a statement. "However, this decline is not necessarily a sign of sluggish overall PC sales long term. Mobile PCs, including notebooks, hybrid and Windows tablets, grew compared with a year ago. The first quarter results support our projection of a moderate decline of PC shipments in 2015, which will lead to a slow, consistent growth stage for the next five years."

The pending arrival should boost PC shipments later this year once Microsoft releases Windows 10, IDC's Singh stated. "Windows 10 should be a net positive as there is pent-up demand for replacements of older PCs," she noted. "Only part of the installed base needs to replace systems to keep the overall growth rate above zero for rest of the year."

Kitagawa in an e-mail said she doesn't anticipate the arrival of Windows 10 playing a significant role in an uptick of PC demand. "We don't expect Windows 10 will stimulate the demand, but will see shipment growth from supply side as manufactures will try to push the volume," she said. "If related marketing activities are visible enough, then it can draw buyers' attention, but it does not mean that it can increase the sales to the end users."

Both research firms also noted that the two largest PC providers, Lenovo and Hewlett Packard respectively, were the only suppliers to grow sales during the quarter. IDC said Lenovo with 19.6 percent share of the market, shipped 13.4 million PCs, an increase of 3.4 percent. HP's sales of just under 13 million systems were up 3.3 percent giving it a 19 percent share of the market. Dell, the No. 3 player, shipped 9.2 million PCs, a 6.3 percent decline giving it a 13.5 percent share.

Smaller PC vendors, defined as "others," accounted for a third of the market and saw their shipments decline 17.6 percent, according to IDC. Naturally that impacted their market share, which dropped from 38.4 percent to 33.9 percent. If that trend continues, expect to see the big get bigger and the rest of the market to be squeezed. One variable is whether HP will be able to maintain its scale after it splits into two companies.

Posted by Jeffrey Schwartz on 04/10/2015 at 12:40 PM