PC market still in the tank - and could get worse

Weak holiday sales, a stagnant global economy, the growing trend towards tablets, and "an underwhelming reception" to Windows 8 conspired to drive down PC shipments by more than 8 per cent last quarter.

Editor's note: As part of our special editorial partnership, CRN is publishing this recent article from Channelnomics in the US

It won't come as news to anyone trying to sell PCs for a living, but in the interest of making it official, IDC. this week released new figures showing PC sales remain in the dumper and are likely to stay there for the foreseeable future.

According to the market watcher, global PC shipments ended last year down 3.7 per cent from 2011. The numbers were exacerbated by an 8.3 per cent drop in the fourth quarter of 2012 alone, the worst numbers ever recorded for a holiday season. Equally gloomy new estimates predict a 1.3 per cent decline for the current year.

If correct, that will make 2013 the third year in a row of PC volume declines. IDC continues to expect limited growth in 2014 and 2015 with contracting volume in later years. In the US, the news was particularly bad with PC sales slipping 6.5 per cent in the fourth quarter and down 7.6 per cent for all of 2012.

In addition to flaccid holiday sales, IDC understatedly attributes the weak 2012 and 2013 numbers to "an underwhelming reception" to Microsoft's new flagship Windows 8 operating system, a stubbornly stagnant global economy and the increasing attraction of more powerful mobile devices like tablets. Resellers who were holding out hope of augmenting their traditional PC sales by expanding into emerging markets won't find much relief there either; emerging market growth potential is declining and coming closer to that of mature regions with sales down for 2012 and projected to be nearly flat through 2017, IDC said.

"The PC market is still looking for updated models to gain traction and demonstrate sufficient appeal to drive growth in a very competitive market," said Loren Loverde, vice president for worldwide PC tracking at IDC. "Growth in emerging regions has slowed considerably, and we continue to see constrained PC demand as buyers favor other devices for their mobility and convenience features.

"We still don't see tablets - with limited local storage, file system, lesser focus on traditional productivity, etc. - as functional competitors to PCs, but they are winning consumer dollars with mobility and consumer appeal nevertheless," Loverde said.

Teased out by form factor, the numbers don't look much better. Desktop PC shipments were down 4.2 per cent worldwide in 2012 to 148.4 million units while portable PCs slipped 3.4 per cent to 202 million units shipped. For 2013, IDC expects 142 million desktops to ship, another 4.3 per cent drop while 203.8 million portables are expected to ship this year, a 1 per cent decline.

But there's perhaps cause for at least some measured optimism, analysts note.

"IDC expects the second half of 2013 to regain some marginal momentum partly as a rubber band effect from 2012, and largely thanks to the outcome of industry restructuring, better channel involvement, and potentially greater acceptance of Windows 8," said analyst Rajani Singh, research analyst at IDC. "We also anticipate a new refresh cycle momentum in the commercial segment driven by the end of Windows XP life support."

IDC's Worldwide Quarterly PC Tracker gathers PC market data in 80 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

For more US channel coverage from Channelnomics, visit www.channelnomics.com