Desktops regain their touch in Q2

Throughout 2009, PC desktop sales in UK distribution experienced strong year-on-year quarterly unit declines. Affected by the increasing saturation of demand for desktops, and the rising popularity of notebooks, the steady decline in PC desktop unit sales seemed unstoppable.

As the year progressed, desktop sales in distribution were also affected by the economic downturn, which hit consumer confidence and private spending, while virtually halting IT investment in companies of all sizes.

We saw PC desktop sales, by unit, in UK distribution fall year-on-year in each quarter of 2009, with Q2 taking the strongest blow – a fall of 23 per cent on the prior-year period.

For the whole of 2009, consolidated PC desktop volumes in UK distribution fell 13 per cent year on year. Notebook units rose 25 per cent during the period. Consequently, desktops accounted for only 20 per cent of the PC distribution market in the UK in Q4, and notebooks 80 per cent.

Steady recovery this year
However, desktop unit sales in UK distribution have recovered steadily in 2010 to date, managing to return to a unit growth path. In March and April 2010, year-on-year unit growth in the desktop segment even outperformed the strong end-of-year performance traditionally registered in this segment.

We saw desktop unit sales in UK distribution up 22 per cent year-on-year in March, and 32 per cent in April. That’s versus the 13 per cent year-on-year growth seen in November 2009.

Clearly, volume growth in 2010 to date has been artificially boosted somewhat by last year’s weak sales. However, while it is difficult to say what part of this year’s growth has been ‘real’ growth, one development in the desktop segment has helped refuel the interest of users in this product category, particularly in the consumer segment.

This is part of what could almost be called a consumer desktop revival, around the improved multitouch functionality in Windows 7 ‘all in one’ desktops. Touchscreens have proved popular with consumers from first launch, despite their higher prices. In 2009, the average selling price (ASP) for a consumer ‘all in one’ desktop was £778, compared to a consolidated consumer desktop ASP of £364. Multitouch support is now core to Windows 7.

In May 2010, ‘all in one’ desktop systems accounted for 19 per cent of consumer-targeted desktop sales in UK distribution, versus 13 per cent last year.

Top vendor in consumer-targeted ‘all in one’ desktops in UK distribution in May was Apple, whose iMac system had a 39 per cent share of the segment. Apple’s share was down year-on-year in May, however, due to Acer, whose Aspire system went from strength to strength following its market entry in late 2009.

May 2010 saw Acer’s Aspire line hold a strong 22 per cent unit share in consumer-targeted ‘all in one’ desktops in UK distribution, followed by HP with a 19 per cent share with its TouchSmart product family. The three largest players in the segment all accounted for at least one of the five top-selling products in UK distribution in May, with Apple easily in the number-one spot.

Great expectations

Latest economic developments, such as the debt crisis, might affect consumer spending during the remainder of 2010. But consumer desktop growth is expected to continuously benefit from demand for ‘all in one’ systems and SKU diversification. PC sales to businesses should also recover slowly, especially as Windows 7 is adopted in the second half.

In the business space, PC sales are also expected to make a gradual recovery, particularly given the likely uptake of Windows 7 in business environments during the second half of 2010. Will desktops maintain or grow their share by the end of this year? So far, it is safe to say that there is still room for the desktop form factor in UK distribution, and even growth.

Marie-Christine Pygott is a senior research analyst at Context