The International Data Corporation (IDC) and Gartner reported that the shipments of PCs around the world were flat in the first quarter of 2018. HP and Dell still managed substantial year over year growth, according to statistics from both agencies.
While IDC reported that total shipments held steady at 60.4 million units (Gartner reported 61.7 million units shipped), there was an unmistakable decline in the number of total shipments regardless of who you asked.
The first quarter of 2018 represented the 14th consecutive reporting period of decline in global PC shipments.
The difference in the total number of shipments comes from the variation in what constitutes the PC market to IDC and Gartner. Gartner does not include iPads or Chromebooks in its reporting. IDC includes notebooks while removing x86 servers and tablets from their totals.
HP Still in the Lead
[Note: All of the statistics directly below come from the Gartner report.]
HP and Dell represent two of the top three market shares in PC distribution, with HP coming in at number one. Year over year, HP increased shipments 2.8 percent. The company now holds 20.8 percent of the total PC market. Lenovo is second with 20 percent market share; however, it only posted year over year growth of 0.3 percent. Dell comes in behind Lenovo in terms of total market share at 16 percent. However, Q1 2018 saw Dell post 6.5 percent year over year growth, which was the strongest of any PC delivery company in the business.
[Note: All of the statistics directly below come from the IDC report.]
Market position was consistent between IDC and Gartner reports – HP, Lenovo, then Dell. IDC gave HP 22.6 percent of the market and 4.3 percent year over year growth. Lenovo held 20.4 percent of the total market and experienced flat growth, while Dell earned 16.9 percent of the market and experienced 6.4 percent growth year over year.
Shifts in Consumer Demand
IDC reported a higher demand for premium notebooks in 2018, which would account for the growth with market leaders in spite of an industry flatline. Premium notebooks became more important for consumers and commercial interests. The same was true of hardware with the Windows 10 operating system built in.
Geographically, consumer demand shifted as well. Gartner reported that a slump in the Asia-Pacific region accounted for a great deal of the slowdown in the industry. However, the United States was not far behind. Shipments to China were down 5.7 percent year over year, while the US required 2.9 percent less hardware than they needed a year before.
The National People’s Congress, an influential gathering of the public and private sector in China, led to much of the decline in the Asia Pacific region. Many large-scale companies on both sides of the fence held off on major hardware upgrades and purchases. China experienced many shakeups in top personnel, and policy regulating industry had not been set by the end of the first quarter.
Flatlining is an Improvement
Although the overall shipment decline does not sound good for the current generation of computer hardware on its face, there is a silver lining. The IDC, while reporting flat year over year growth, estimated a decline of 1.5 percent. Flat growth is an improvement, and points to a faster move towards commercial renewal activity. Companies are beginning to familiarize themselves with Windows 10, which will increase activity for HP, Lenovo and Dell in the near future.
Moving Towards Success
The company that focuses its efforts on gaming systems and premium notebooks will likely experience growth in quarters to come, says the IDC in its recent press release.
An even better tidbit from recent reports – higher profit margins. Vendors are slowly but surely raising the prices of OEM units and components to reduce the impact from slowdown in the replacement parts and smart phone markets. PC manufacturers are also justifying higher prices through DRAM components. As the enterprise level companies in China and the US re-enter the market, you can expect increased demand to raise profit margins even more.
In short, the IDC and Gartner reports are nothing to worry about. The industry flatline represents a bit of short term political upheaval and consumer shift. They do not represent disinterest. Moreover, once the industry returns to form, smart vendors will be able to get even more money out of the same amount of sales!
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