PC market shows signs of resilience amid decline
Published: 16 Apr 2009 09:43 BST
The PC market shrank during the first part of 2009, but not as badly as expected.
Shipments of PCs during the first quarter were down 7.1 percent from a year ago, to 63.5 million units, according to IDC, which released its Worldwide Quarterly PC Tracker on Wednesday. That is an improvement from the 8.2 percent decline that IDC had projected.
It is a "good sign" for PCs, said Loren Loverde, the programme director for the PC Tracker at IDC. Loverde says the better-than-expected results were aided by falling prices of PCs and more new PC buyers around the world.
It is telling of the depth of fear the economy is stirring up when these numbers are considered a positive sign, especially when placed in context: a continually volatile world economy, accompanying high rates of unemployment, and companies that continue to hold off on technology spending.
This is not the only sign things might be turning around for technology companies: Intel chief executive Paul Otellini was surprisingly bullish on the market for PCs on Tuesday during his company's earnings call. He commented: "We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns... I believe the worst is now behind us from an inventory correction and demand level adjustment perspective."
It may not be totally behind us: IDC is predicting roughly eight percent declines in growth for the second quarter. But there are several things to consider. Although consumer confidence is low, there are increasingly more PCs with lower prices to match available. Low-cost portables, like Netbooks, continue to be the bright spot for many PC makers, especially Acer and Asus, and helped to stem the overall decline worldwide.
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And some regions are faring better than others. In the US, considered a saturated market for PCs, declines were kept to just three percent. Last month, Dell founder and chief executive Michael Dell told an audience during a speech in China that the worldwide demand for PCs was "steady", and echoed IDC's assessment of US consumers' continuing appetite. But of the top five PC vendors in the US, only Dell and Apple saw overall shipment declines when compared to the same quarter a year ago. Apple dipped slightly at 1.2 percent, but Dell's drop was more drastic at 16.2 percent.
"The US PC market proved to be surprisingly resilient this quarter as notebooks were still seen as important purchases by many US consumers," said Bob O'Donnell, vice president of clients and displays research for IDC in the report. And the gap between the world's largest PC maker, HP, and the rest of the field is growing. HP saw its overall shipments increase and it overtook Dell as the leading PC vendor in the US.
HP's shipments outside the US increased 2.9 percent, but its shipments to US retailers and consumers was up 12.2 percent. Dell's shipments worldwide declined 16.7 percent worldwide, and 16.2 percent in the US. Though the Texas-based PC maker has done a lot of work to improve its business over the past two years, the first quarter of 2009 was particularly difficult for the company.
"Dell is still largely a commercial company," said Loverde.
Fewer than 30 percent of Dell's sales come from consumer PCs worldwide, and the most growth in the market is coming in the consumer category, such as netbooks, and Dell has not been as aggressive as the likes of Asus and Acer there, Loverde noted. "But I think we have a combination of Dell tentatively going after this growth segment combined with the challenge of executing with channel partners in a really volatile environment. Obviously the economic crisis is affecting products and consumer demand."
The top five PC makers worldwide stayed basically the same: HP holding 20.5 percent of the market, followed by Dell (13.6 percent), Acer (11.6 percent), Lenovo (seven percent), and Toshiba (5.4 percent), according to IDC's numbers.
Credit: PC market shows some resilience amid continuing decline from CNET News
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