Market Watch

Global PC Market Disappoints due to Persistent Weak Demand


Desktops suffer and Ultrabooks have yet to deliver
The global PC market for desktops, mobile PCs and entry-level servers remained soft during the second quarter in the face of overall weak demand, while lackluster sales of Ultrabooks has deflated optimism for the rest of the year, according to an IHS iSuppli Compute Platforms market tracker report from information and analytics provider IHS.

With final figures in, total shipments to the PC market in the second quarter amounted to 85.1 million units—up a marginal 1.2 percent from 84.0 million in the first quarter. Both the mobile PC and entry-level server segments made sequential gains, equivalent to 3.9 and 4.5 percent, respectively. However, a 3.4 percent decline in desktops dragged down the total PC space.

 

Globaly PC Quarterly Shipments

The increase in the second quarter was so slight as to be negligible. Economic conditions worldwide continued to cast a long shadow, keeping consumers from new PC purchases that could have revitalized the space. The ongoing popularity of tablets and smartphones also added to the PC market’s woes, as money from consumers went to those gadgets instead, IHS iSuppli believes.

No immediate relief appears on the horizon, as projected third-quarter results show worldwide PC shipments dropping further to 85.0 million units. And while improvement is anticipated in the fourth quarter, the loss in three out of four quarters for the year means that total PC shipments for 2012 will be down from 2011—the first annual decline of the PC market in 11 years since 2001 when the dot.com bubble burst.

Desktops continue to suffer

The worst performance during the second quarter was from desktops, which made up 35.4 percent of the total PC market. Shipments stood at 30.1 million—the lowest in at least six quarters. No immediate reprieve for the space appears at hand, especially with Ultrabooks and other ultrathin laptops anticipated to further cut into the desktop hegemony. Perhaps the one bright spot left is the all-in-one PC sector, which could entice users with their sleek space-saving design, aggressive pricing and touch-friendly features compatible with the forthcoming Windows 8 operating system.

In contrast to the beleaguered desktop segment, the mobile PC and entry-level server sectors fared better. The mobile PC area had second-quarter shipments of 52.8 million, or 62.1 percent of the total PC market. Entry-level servers, meanwhile, enjoyed shipments amounting to 2.2 million during the same period, equivalent to 2.5 percent of the total PC market.

The gains within the mobile PC sector masked more complex results, however. The netbook submarket is down considerably—not just for the quarter but also for the whole year. Impacted by popular tablets and the growing ultrathin notebook category, netbook shipments will fall a steep 32 percent this year.

For the entry-level server segment, the positive second-quarter results were welcome, especially at a time when government entities and the commercial sector were becoming more conservative in purchasing new servers, deterred by high unemployment in Europe and the United States, coupled with massive public debt.  

The Ultrabook factor 

A large factor playing into the PC market’s hopes for an eventual revival lies in the new category of mobile PCs known as ultrathins.  Within this category lies Intel’s Ultrabooks.

But while the industry continues to bank on Ultrabooks and ultrathins to propel PC sales forward, the machines on their own have not made any great discernible impact on consumers. High prices have prevented the units from selling, and consumers have yet to be fully convinced of the value proposition presented by the new devices. The Windows 8 launch later in the month could prove a catalyzing agent, but historical trends show that a new operating system will need time for market recognition to set in and achieve critical mass.

The more likely picture is that Ultrabooks and ultrathins start picking up steam next year. By then, prices will have come down somewhat, Windows 8 will be in full gear, and the combined onslaught of touch-based, hand-gesture and voice-recognition capabilities in the machines will help spark the long-awaited consumer interest for the category.

Silicon Valley-based Hewlett-Packard remained at the top of the PC market in the second quarter, even though its share fell to 16.5 percent from 19.2 percent in the first quarter. Lenovo of China, in a feat of spectacular growth, was second with 15.1 percent market share, up from 9.3 percent. Texas-based Dell was in third place; followed by Acer and Asustek Computer, both from Taiwan, in the fourth and fifth spots.

Read More >> PC Market Showed No Signs of Improvement in Q2