First-quarter PC sales hit lowest level since 2007

Market research data from Gartner found that PC sales collapsed 9.6 percent in the first quarter of 2016, while rival IDC talks about a plunge of 11.5 percent. The methodology of both firms is a bit different, which leads to somewhat different result but the conclusion that the PC market shrunk drastically remains the same.

Gartner writes first-quarter PC sales fell to 64.78 million units and notes that this is the first time since 2007 that the volume dropped under 65 million units. The research agency blames the US dollar strength as well as the lower adoption rate of PCs, as smartphones are now a higher priority.

"The deterioration of local currencies against the U.S. dollar continued to play a major role in PC shipment declines. Our early results also show there was an inventory buildup from holiday sales in the fourth quarter of 2015," said Mikako Kitagawa, principal analyst at Gartner.

"All major regions showed year-over-year shipment declines, with Latin America showing the steepest drop, where PC shipments declined 32.4 percent. The Latin American PC market was intensely impacted by Brazil, where the problematic economy and political instability adversely affected the market, Ms. Kitagawa said. "The ongoing decline in U.S. PC shipments showed that the installed base is still shrinking, a factor that played across developed economies. Low oil prices drove economic contraction in Latin America and Russia, changing them from drivers of growth to market laggards."

PCs are not being adopted in new households as they were in the past, especially in emerging markets. In these markets, smartphones are the priority. In the business segment, Gartner analysts said the Windows 10 refresh is expected to start toward the end of 2016.

IDC on the other hand talks about a 11.5 percent drop to 60.58 million units.

"In the short term, the PC market must still grapple with limited consumer interest and competition from other infrastructure upgrades in the commercial market," said Jay Chou, Research Manager, IDC Worldwide PC Tracker, "Nevertheless, IDC still projects total business IT spending to grow compared to 2015, and as we head toward the end of 2016 things should start picking up in terms of Windows 10 pilots turning into actual PC purchases."