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Global PC Market Declines as U.S. Sales Lag

Worldwide shipments of traditional PCs in the third quarter remained flat or were slightly down, according to the two leading data-tracking companies.

IDC’s research showed shipments of desktop, notebook and workstation computers totaled 67.2 million units in the third quarter of 2017, which translates into a slight year-over-year decline of 0.5 percent, though the research firm said the results were better than projections of a 1.4 percent decline, and further demonstrate the trend of market stabilization in recent quarters. Improvement in emerging markets as well as back-to-school promotions helped boost results.

Gartner had worldwide PC shipments at 67 million units in the quarter, which compared with earlier Gartner research, marked a 3.6 percent decline from the same period in 2016. Gartner said this was the 12th consecutive quarter of declining PC shipments.

IDC said component shortages in recent quarters have continued to improve and thus did not factor as a significant hindrance to production volumes. Nonetheless, higher component prices and inventory in some markets meant limited shipments and validated IDC assumptions about a muted third quarter. Not surprisingly, competitive pressures further cemented the dominance of the top five PC companies, which accounted for nearly 75 percent of the total traditional PC market.

Gartner disagreed with that finding. “There are ongoing component shortages, with DRAM shortages getting particularly worse during the third quarter of the year compared with the first half of 2017. The component price hike impacted the consumer PC market as most vendors generally pass the price hike on to consumers, rather than absorbing the cost themselves,” said Mika Kitagawa, principal analyst at Gartner. “We expect the DRAM shortage to continue to the end of 2018, but it will not be reflected in the final PC prices immediately.”

Gartner called out the relative weakness of the U.S. market for the worldwide decline. “While there were signs of stabilization in the PC industry in key regions, including EMEA, Japan and Latin America, the relatively stable results were offset by the U.S. market, which saw a 10 percent year-over-year decline in part because of a very weak back-to-school sales season,” Kitagawa said. “Business PC demand, led by Windows 10 upgrades, continued to drive PC shipments across all regions, but its refresh schedule varies by region. The countries with stable economies, such as the U.S., have created a positive sentiment among businesses, especially for small and midsized businesses, which are more vulnerable to external events, such as economic or political.”

According to IDC, HP retained the top spot and further lengthened its lead with a nearly 22.8 percent share of the global market, helped in part by major wins in Asia/Pacific. HP was the only top vendor to manage a notable shipment increase with growth of 6 percent on the year. Lenovo was second with 21.6 percent.

Gartner called Q3 a “virtual tie” for the top spot, with HP at 21.8 percent and Lenovo at 21.4 percent. However, Gartner said, HP is in an upward trend, as it has experienced five consecutive quarters of global PC growth, while Lenovo is in a downward trend with declining shipments in eight of the last 10 quarters.

“The traditional [global] PC market performed much as expected in the third quarter,” said Loren Loverde, program VP at IDC. “Emerging markets rebounded slightly more than anticipated, but overall results reflect the stabilization we expected following component and inventory adjustments. The outlook for the fourth quarter remains cautious, likely with a small decline in volume for the quarter and the year. The gains in emerging regions and potential for more commercial replacements represent some upside potential, although we continue to expect incremental declines in total shipments for the next few years.”

As for the U.S. market, Gartner’s Kitagawa said, “Weak back-to-school sales were further evidence that traditional consumer PC demand drivers for PCs are no longer effective. Business PC demand is stable in the U.S., but demand could slow down among [small- and medium-size businesses] due to PC price increases due to component shortages.”