The Strategist

Worldwide PC Shipment on a Painful Decline


04/10/2015 - 19:55



Lenovo took the top position in PC shipments across the world.



Worldwide shipments for PC tumbled down 5.2% to about 71.7 million units in first quarter 2015 as compared to previous year, according to Gartner. The performance of PC industry in recent years has not been spectacular mainly due to the remarkable growth in smartphone sales. Lenovo emerged as the largest manufacturer of PC across the globe, almost a decade after acquiring the PC business of IBM. Despite the PC industry being overshadowed by increasing popularity of smartphones and wearable devices, Lenovo took the lead in world market share.

During 2014, PC industry got the much needed stimulus due to substantial rise in replacement of PC’s by many companies as Windows XP support came to an end. However, the replacement cycle gradually faded in the first quarter of 2015.This plunge cannot be considered as an indicator of sluggish PC sales for a long term. The popularity of notebooks and tablets has grown considerably as compared to previous year. The outcome of the first quarter supports Gartner’s projections of a modest slide in PC shipments in 2015. But gradually it will be witnessing a slow and steady growth over the coming five years. The worst affected segment of the PC business is the Desktop PC with its shipments slipping steeply. The Mobile PC’s shipments were boosted by the underlying replacement cycle that fuelled mobile growth in the first quarter of this year.

China’s PC market continues to weigh on the total regional revenue. Both the consumer and commercial segments of the Chinese economy is expected to record restrained demand. The latest version of Microsoft Windows are likely to spark revenue growth in the PC market.

Among the top five PC makers, Lenovo and HP are the only two companies that experienced an upsurge in PC shipments in the first quarter of the year 2015. Lenovo recorded robust growth and became one of the leading vendors of hybrid notebooks in developed markets. The performance of HP was moderately sound and it maintained its lead in the US market with 26.1% of PC shipments. Lenovo and Asus recorded substantial rise in shipments in the US market. However, Dell witnessed drop in PC shipments for the first time in past 6 quarters. Although Dell gained substantially from the demand fuelled by replacement in 2014, the revenue started declining as the replacement purchases faded.
 
The coming release of Windows 10 is expected to consolidate Window 7 and Windows 8.1. Besides, free up gradation to the consumers for almost one year, there will be a ramp-up in demand for replacement of the older PC. PC market is largely dependent upon the pricing. As the market is becoming highly tough to compete, some consolidation are expected to take place in the near term. The slump in PC shipments is expected to knock Intel, the chip making giant. The lower than expected demand for desktop PC’s dragged down the sales outlook of Intel previous month for the first quarter 2015.




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