PC market turmoil: The worst could be over

PC market turmoil: The worst could be over

Summary: Lenovo tops HP in the PC vendor wars, but the players are fighting over a shrinking market. Despite the gloom, there are signs of PC buying in the U.S. and a few positive points to note.

SHARE:

The PC market remains a mess as shipments declined for the fifth consecutive quarter, but there's a case to be made that shipments have hit bottom and could improve going forward.

According to data from both Gartner and IDC, Lenovo is the new top gun in the PC market as it took the No. 1 spot from HP. Globally all of the top vendors shipped fewer PCs. In the U.S., Dell showed positive growth as did Lenovo, but other players---including Apple---saw declines.

The primary culprit behind the PC market's problems is the tablet, which in many cases is replacing the laptop as a consumption device. Windows 8 also takes some blame for the PC market's issues, but Gartner noted that argument is bunk because it doesn't explain the secular decline in shipments.

Great Debates: Can Windows 8.1 re-start Windows 8? | Can PC makers survive in a post PC world?

gartner0711

 

Indeed, the PC market is shrinking, but there are a few positive signs to indicate that the industry may find its footing. Here are a few key items to consider before you write the obit for the PC industry.

  • The death of the netbook makes the PC market look worse. Acer and Asus second quarter shipments cratered 35.3 percent and 20.5 percent from a year ago, respectively. Both Acer and Asus ditched netbooks, which fueled growth in the PC industry and then flamed out quickly. If you factor out netbooks, the PC decline in shipments normalizes a bit.
  • Enterprise upgrades are continuing. There's a reason Lenovo and Dell showed growth in the U.S.---corporations were upgrading PCs. Microsoft's move to end support for Windows XP has prodded companies to upgrade to Windows 7 and new hardware. IDC said that PC lifecycles are likely to stabilize after years of being extended.
  • U.S. shipments fell less. Gartner noted that U.S. PC shipments were 15 million in the second quarter, down 1.4 percent from a year ago. That was the smallest decline in seven quarters.
  • Windows 8.1 and new Intel chips. IDC noted that the PC ecosystem still has a lot of work to do to cook up new form factors that will sell, but a bevy of touch enabled PCs and a revised Windows 8 shows the industry is moving in the right direction---slowly.
  • The industry cut its inventory. PC vendors were dumping inventory to get to new Intel chips and Windows 8.1. As a result, the PC market will feature new models and that will bolster growth somewhat in the second half.
  • PCs are being redefined. Much of the focus around the PC market has revolved around how tablets are taking share. The issue going forward is going to be that the PC will increasingly look like a tablet with hybrid devices. In other words, the definition will be murky. At some point, tablets may be viewed as PCs.

Certainly, the PC industry has major challenges. Emerging markets frowned on PCs and focused on tablets. It's also unclear what happens when corporations upgrade to Windows 7. The market could shrink even more. And of course, the PC industry simply needs better hardware designs and Windows 8 to get a footing. Despite those significant wild cards, there are some signs that the PC market has bottomed for now.

idc0711

 

Topics: PCs, Dell, Hardware, Hewlett-Packard, Lenovo, Bring Your Own Device

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

23 comments
Log in or register to join the discussion
  • HP and lenovo are doing well

    but the market is down a lot. over 10% Y/Y, and down 3 million units from last quarter
    theoilman
  • Excellent Analysis

    PC Vendors need to continue to innovate and introduce new and better designs, improve build quality. We are beginning to see some very compelling PC devices enter the market place. It should make for a very interesting time in the next 12 months.
    gomigomijunk
  • Domestic or Business ?

    I really wish analysts would split the market in to Business and Domestic ... Businesses are locked in to their PC software and hardware and their psychological dependence and the persuasiveness of their IT staff who depend for their jobs on keeping their PCs. Domestic users are not so locked in and their trends are far more enlightening imho.
    saoir
    • Lock in

      The only thing we are "locked in" to is providing our users with the best tools to do their jobs, and the best and right now only tool for almost all business work is Windows PCs. Most of us in IT use a wide variety of systems, from phones and tablets to *nix to mainframes, so we are most certainly not favoring PCs because of some dubious attempt at job security. Job security for us means keeping our users productive and the business profitable.
      itpro_z
      • Ah yes

        Ah yes ... Network managers unite !
        saoir
      • Re: The only thing we are "locked in" to is providing our users with the be

        Ah yes, of course you are locked in to not having to decide which is the best, that's already been decided for you.
        ldo17
    • I get where you are likely going with those thoughts.

      Let me take a stab at it.

      Business, because their wild and crazy IT staff will conitnue to want traditional PC's and laptops to dominate the workplace because they play heavily into them keeping their jobs. Plus, businesses may fairly have some higher demand for traditional PC for work related reasons.

      Homebody consumers of the Joe Average type have no IT guys telling them what they need and have a much lower need in general for traditional PC's.

      And its one of those cases where your only a little better then half right.

      I still dont know a home PC user who needed a PC to do certain things in comfort on, a year or two ago, that still dosnt need at least one, sometimes two, sometimes even more once you count in real work laptops, at home because they still do the same things they did a year or two ago and that still means they cant comfortably get by with a tablet and cell phone only.

      It shocks me that so many dont want to believe that, yet the very ones who just cant believe the public at large are not swapping there desktops and laptops for tablets and smartphones still have their own Mac or Linux box at home they refuse to throw out.

      Lets be truthful here, the ones who want to believe the world is somehow getting by without the traditional PC are largely those who have little use for Windows. Yet they dont seem ready to give up their Macbook or Chromebook anymore than the guy next door is willing to give up his Windows based machines.

      Sorry, just the reality of the situation.
      Cayble
  • PC adoption are essentially dead among consumers in developing markets

    PC mind share among average consumers isn't likely to recover in those markets, now that third party mobile stores and mobile carriers are now heavily promoting their smartphones and tablets while some of the traditional PC stores are beginning to resort to selling Android tablets to keep their doors open. Therefore, for the PC market, the dream of acquiring the next billion first time PC users from the developing market is effectively over and is now replaced with the nightmare of potentially losing the last billion PC users.

    I expect that the global PC market will continue to contract in size for years to come as only those consumers who actually need PCs will see PCs as an impulse buy or as a mandatory tool. Temporary reprieve may come next year from replacement of some of the XP machines that are being used online by enterprise, but that replacement cycle won't include much of the developing markets where XP usage is highest.
    eMJayy
    • Holds true for developed markets too

      A few points to note:

      1. Unless everybody is a techie or an avid gamer, families have started moving to the "one computer per family" mode.

      2. Families are not corporates, they do not have regular upgrade cycles, but by cutting down on the number of computers they buy, they are affecting the overall Windows and PC market

      3. Most of us who comment here are techies (and we are all extremely biased towards Windows/ MacOS/ iOS/ Android/ Linux etc). The real world (of families and people) has stopped caring for Windows.

      4. Maybe many people in the real world feel that Windows in any form is clumsy on tablets (though techies like us may like it); there is a wide spread perception that iOS is best followed by Android. The sales numbers indicate that.

      5. The business world is still in the Windows 7 upgrade cycle.
      GoForTheBest
      • Upgrade/Replacement cycle

        If an older PC can still do what is required with the installed software there is no incentive to upgrade or replace it. This will stretch the replacement cycle for businesses and consumers.
        Linux_Lurker
        • Exactly! Bingo!!!

          Give the man a cigar of his choice.

          That is at least 90% of any problem in the PC market now. Software, most particularly a robust OS can last for what seems like forever. Current middle of the road hardware can do just about anything 90% of users ask of it, and likewise under used high quality hardware also now seems to last for what seems like forever.

          Who needs a new PC? Hardly anyone.
          Cayble
    • ???

      You idea is the developing world isnt adopting to traditional PC's???

      FAIL.

      Look it up. Some of the largest gains there are in PC sales come from the developing world.

      What absolute madness brought out some bizarre train of thought that the developing world, the very place that now have fewer PC's per capita and are developing into bigger business and bigger everything is not adopting to the traditional PC?

      Please please. I dont know where you dug up that gem but common sense should have told you that it was pretty much a practical impossibility for a country thats actually developing in any meaningful way to not be adopting to the PC. Please.

      At least make some effort in thinking things through before simply speaking.
      Cayble
      • Re: Cayble

        Cayble,

        eMJayy said "market," not "world." There's a huge difference.

        Mainframes are a dead market.
        Desktops/notebooks are a saturated market.
        Phones and tablets are a growing market.
        Hybrids are a developing market.
        Large screen touch is an experimental market.

        These have nothing to do with any country or state of its development.
        Webminotaur
  • "...to keep their doors open."

    Considering how little profit there is in Android tablets I really doubt that any retail stores are keeping their doors opens selling them. Is anyone besides Microsoft profiting from Android?
    itpro_z
    • Re: Considering how little profit there is in Android tablets

      Yet Samsung and Asus seem to be doing rather well out of them.
      ldo17
  • PC's or Lappy's

    Wait are we really talking PC's here 'cos those figures are horrible. What about user built systems?
    Jaezass
    • Re: Jaezass

      Home-builds and barebones kits are considered component sales, not computers. As such, they don't show up in the figures. However, even if they did show, there would be minimal difference in the numbers.
      Webminotaur
  • The PC Market

    People always seem to make the new PC shipments look worse than they are. At 76,000,986 per quarter (over 800,000 per day) the number of PCs is continuing to grow; it's just that the rate of growth is slowing down. Sort of like filling a glass. When it is empty you pour fast, reduce the flow as the glass fills, and end with a trickle at the top. How fast the fluid is going into the glass has no effect on what's already there. Likewise, new PC shipments does not reflect the overall PC usage/replacement. The figures merely show that the flow of new PCs is starting to slow, but it's still quite viable.

    Manufacturers haven't come out with an new, exciting PC. They're experimenting with ideas (all-in-ones, large screen touch for multiple users, and such), but so far they haven't been able to generate much interest in these. Instead, they have shifted their emphasis to the growing demand for mobile devices (as is shown in other reports).

    One should note that mobile devise sales are either in addition to a PC or in lieu of purchasing/replacing a notebook. The only people actually replacing an existing PC with a handheld are those who didn't really need a PC in the first place; handhelds are better suited for what they do. [Note: this is added hoping to quell those who always seem to accuse people of claiming everyone will throw out their PC and get a handheld instead. Such a concept is sheer nonsense.]
    Webminotaur
  • Market has split

    Not long ago just about every home PC was the only device that could be used for email, some surfing and the occasional chat room. Today tablets and smart phones cover those minimal computing tasks adequately.
    When it comes to real computing, creating music, editing videos, drawing a master CAD plan only a real PC can do the job.
    Soon the market will level out and those minimalists will be happy with their toys while real computer power users will continue upgrading and updating their desktops.
    Like the microwave it never took the place of an real oven, just a few saucepans.
    kevsan
  • The Worst May be Over ?

    Larry, you're sounding like a Government Administration economist. The economy is at a very tenuous & weak steady state. There was a partial recovery with the infusion of cheap money and now that the fed has stopped increasing it's artificial cash creation, it's back at flatline "pancake". Oscilating a little up and a little down but way down from 5 years ago. The stock market surging feels a lot like another "bubble like in 2000 - 2002. Companies aren't increasing their profitability at anywhere near the rate that the market is increasing. Some recovery but far too fast to be sustainable IMO.

    PC sales are like EVERY OTHER "optional" and delayable commodity expense for the average consumer. For those of us that either lost their better paying job, have seen NO raises over the last 4 years, or had a financial meltdown, it's "buy it when it dies". Even cars, though more essential for 'getting to the job' are going to stay tenous.

    The only sustained cash flow is likely to be in the used / refurbished markets where folks can seek a cost advantage to replace essentials that have worn out. When Windows Xp goes off support next spring, don't be surprised if only half of those PC's turn over in the next 3 months. The economy IS NOT WELL and it's still VERY OBVIOUS regardless of how spending by those that were unaffected by the economic downturn goes.

    Yep, it sounds like GLOOM and DOOM. Ignoring the real situation is, put gently, foolish. Deal with reality and there's a chance of changing it sooner. Ignore it and join it.

    eBay and all the marketers of refurb's are more likely to thrive than new equipment makers in the USA until we repeatedly DEMAND that our government become fiscally responsible. This last "improvement" in the economy has come at the expense of increasing the fiscal debt of the USA by over 40% (in 5 years!).
    daves1646