Will consumer laptop demand continue?

Consumer clamshell notebooks were back in demand in the third quarter and are expected to see sales grow further, notes Marie-Christine Pygott

The penultimate quarter of this year saw a return in demand for consumer clamshells when it comes to notebooks. While individuals shunned the long-established form factor last year in favour of tablets, 2014 has been all about getting a new, traditional clamshell laptop.

According to our data, sales of consumer-targeted clamshell notebooks through UK distribution increased by 20.3 per cent in Q3 of 2014 versus last year; slate tablet sales, previously driving much of the personal systems consumer sales growth across the UK, fell 23.8 per cent over the same period.

There are a number of reasons for this. While the need to migrate from XP after Microsoft ended support in the spring mainly benefited business sales, it was also an incentive for some of the more security-conscious private users to buy a new home PC.

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Also, refreshes of home PCs were long overdue; many consumers over the past couple of difficult economic years made do with their ageing home system.

Tablet replacement cycles, on the other hand, proved longer than expected. The quality of popular high-end systems made quick upgrades unnecessary, while consumers using low-end, cheaper tablet systems would often only have bought these less than a year ago during last year's Christmas period.

Probably the strongest factor behind the shift in demand, however, was a push in low-end, aggressively priced notebooks that characterised the quarter.

With low-end systems benefiting from Microsoft's Windows 8.1 with Bing, a general focus on entry-level Windows 8.1 systems and an increasing variety of Chromebooks, consumers had a huge choice of traditional laptop systems at relatively low prices in Q3 this year.

As a result, this quarter's notebook sales were strongly driven by low-cost items.

According to Context data, sales of clamshell notebooks featuring average distributor sell prices of below £200 increased by nearly 180 per cent year on year, comprising 35 per cent of sales in the segment. That's compared with only 15 per cent last year.

© All charts copyright Context 2014. All rights reserved.

The average selling price for a clamshell consumer laptop in distribution went down accordingly over the period, from £300 one year ago to £285 this quarter. Within the sub-£200 price category, notebooks based on Windows with Bing made up almost one quarter of sales, while Chromebooks accounted for 23 per cent.

So what are the expectations for the consumer-driven fourth quarter? Will clamshell notebooks continue to do well? Initial data for early Q4 of this year suggests this will indeed be the case.

Consumer clamshell notebook sales across UK distribution increased by another healthy 23.1 per cent year on year in October, once again driven by strong growth in the sub-£200 pricing segment.

Expectations are for good growth in the segment to continue, particularly as Microsoft's Windows with Bing initiative will go on throughout Q4 - helping provide consumers with a wide choice of budget laptops throughout the Christmas season.

Sure, consumers will also be presented with more tablets in the run-up to Christmas, and tablet pricing is expected to be aggressive due to strong supply and high competition. There will also be a variety of detachable two-in-one products on offer, although demand in this segment has so far remained small.

In Q3, two-in-one products made up only five per cent of consumer notebook sales in UK distribution. Probably most importantly, though, many consumers buying tech may allocate a large part of their budget to smartphones, where sales will benefit from new product launches as well as attractive pricing offers.

But, unlike last year, the continuous push in cheap notebooks and rising saturation in tablets means that traditional clamshell notebooks will certainly not be the last item on consumer tech wish lists this quarter.

Marie-Christine Pygott is a senior analyst at Context