PC market turmoil: The worst could be over

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.
Written by Larry Dignan, Contributor

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.

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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.



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