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IDC sees bigger than expected pain for PC market

Posted on Thursday, June 09 2016 @ 16:06:21 CEST by


A new IDC report claims more trouble is ahead for the PC industry as shipments are declining faster than expected. The research agency calculated global PC sales collapsed 12.5 percent in Q1 2016, versus an anticipated drop of 11.3 percent. Several factors are blamed, including weak currencies, depressed commodity prices, political uncertainty, and delayed projects all exacerbated the shipment decline.

The full-year outlook was revised downward as well, IDC now expects negative growth of 7.3 percent, about 2% worse than before. Sales have seen a steep decline over the last couple of years and especially the desktop PC was hit hard, with sales declining from 133.9 million units in 2014 to an estimated level of 103.3 million in 2016. Laptop sales on the other hand amounted to 174.4 million units in 2014 and are expected to hit 152.3 million units this year.

Global PC sales fell 2.1 percent in 2014, collapsed 10.6 percent in 2015 and are expected to fall another 1.7 percent in 2017 after this year's forecast nosedive of 7.3 percent.
Worldwide PC shipments are forecast to decline by 7.3% year over year in 2016 according to an updated forecast from the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. The outlook continues to call for progressively smaller declines through 2017 followed by stable volume in 2018. However, growth in 2016 is now expected to be roughly 2% below earlier projections as conditions have been weaker than expected. Growth in the first quarter of 2016 (1Q16) came in at -12.5%, just below IDC's forecast of -11.3%, and inhibitors such as weak currencies, depressed commodity prices, political uncertainty, and delayed projects continue to constrain shipments.

Although growth rates for devices such as phones and tablets continue to fall, potentially reducing the competitive pressure on PCs, we have not seen this translate into stronger PC shipments. The financial pressure on consumers across regions, and the availability of alternatives such as delaying a PC replacement by using a free Windows 10 upgrade or relying more on other devices continues to pressure consumer PC shipments. Similarly, while a large share of enterprises are evaluating Windows 10, the pace of new PC purchases has not yet stabilized commercial PC shipments.

Detachable Tablets also present a growing challenge as specs and price increasingly compare favorably against notebook PCs. Combining detachable tablets with PCs, the market is projected to decline by just over 2 percent in 2016 with small positive growth in later years, though still falling well short of peak shipments.

"The latest update reflects continuing pressure on PC shipments, but does not significantly change the factors driving the market," said Loren Loverde, vice president, Worldwide Tracker Forecasting and PC research. "In addition, we have now had four consecutive quarters of double-digit volume declines. This type of prolonged slump is unprecedented, and lowers the bar for some improvement going forward. Unfortunately, the PC market still faces some persistent challenges, and for now, improvement continues to mean slower declines."

"Although inventory has improved in some markets, channels remain extremely conservative," said Jay Chou, research manager, Worldwide PC Tracker, "The economic and competitive pressures are particularly affecting the consumer segment, which is projected to see another year of double-digit declines in 2016, and decline throughout the forecast. In contrast, commercial shipments are projected to decline just 4.4% in 2016 and see slightly positive growth for the next few years."

The U.S. PC market suffered a rough opening salvo. "There are some strong market drivers imminent," said Linn Huang, research director, Devices & Displays. "Chromebooks should continue their rapid ascent in U.S. K-12 as we enter the peak education buying season. We also believe that some organizations will have been testing Windows 10 throughout the year and will start the transition in earnest towards the end of the year. Still, the backdrop to all of that remains an ever softening consumer PC market."




 



 

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