Trade Resources Industry Views PC Market Stabilizes with Solid 4Q16 Shipments

PC Market Stabilizes with Solid 4Q16 Shipments

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Worldwide shipments of traditional PCs (desktop, notebook, and workstation) totaled 70.2 million units in the fourth quarter of 2016, posting an on-year decline of 1.5%, according to the IDC Worldwide Quarterly Personal Computing Device Tracker. The results continued the recent trend of stabilizing growth, which has been in decline since 2012.

Annually, shipments of traditional PCs slipped to 260 million units, down 5.7% from 2015. The first quarter of 2016 was still constrained by high inventory, free Windows 10 upgrades, and difficult comparisons to commercial replacements in 2014 that were fueled by the end of support for Windows XP. However, mid-2016 and particularly the recent fourth quarter have moved beyond these inhibitors and seen stabilizing commercial demand. Contraction of the consumer PC market has also slowed as growth and competition from tablets and phones has eased up. Recent quarters have faced some tight supply of components such as SSDs, displays, and memory. The supply constraints did not significantly slow overall shipments, and in fact may have boosted growth slightly and accelerated market consolidation as the largest players moved to lock up supply.

Mature regions continued to perform best. Japan and Canada extended positive growth from the third quarter of 2016, while volume in the Europe, Middle East, and Africa (EMEA) region was stable. Shipments in the US declined slightly, although the country performed slightly better than the global average. Asia Pacific (excluding Japan) continued to improve with only a mild decline in shipments while Latin America continued to experience significant contraction.

"The fourth quarter results reinforce our expectations for market stabilization, and even some recovery," said Loren Loverde, vice president, Personal Computing Trackers and Forecasting. "The contraction in traditional PC shipments experienced over the past five years finally appears to be giving way as users move to update systems. We have a good opportunity for traditional PC growth in commercial markets, while the consumer segment should also improve as it feels less pressure from slowing phone and tablet markets."

"The US PC market was able to pull off a strong last quarter of the year with impressive growth in the retail PC segment that surpassed expectations," said Neha Mahajan, senior research analyst, Devices and Displays. "Although this might signal regained consumer confidence in the PC market, with most of the sales being driven by aggressive promotions in the holiday season, it needs to be seen how much of the real demand is carried forward in the coming quarters."

Regional highlights

The US market witnessed a slight decline in shipments this quarter. Following inventory growth in the third quarter, the fourth quarter saw growth toning down. At the same time, the retail PC market in the US came out strong, backed by aggressive promotions by top PC vendors in December. Overall, traditional PC shipments for the fourth quarter of 2016 stood at 17 million units.

The EMEA market performed better than expected, fueled by strong holiday season sales of traditional PCs. While desktops performed in line with IDC's expectations, notebooks grew above forecast across the region. However, component shortages are expected to have driven some of the vendors' shipment towards inventory build-up.

The Asia Pacific (excluding Japan) traditional PC market continued to stabilize with only a slight on-year contraction. The demonetization crisis in India had a significant impact on the market, stifling demand and inhibiting shipments in the consumer and small-to-medium-size business (SMB) segments, but recovery towards the end of the quarter allowed for more sell-in. In China, robust demand for consumer notebooks supported by a shift to thin and light devices continued. The commercial market in most Asia Pacific countries excluding Japan remained soft. Projects in India have been delayed, while China saw weaker than expected commercial demand. A negative macroeconomic environment also inhibited shipments, particularly in Malaysia, Indonesia, Singapore and the Philippines. On the other hand, larger orders from the public sector pushed the commercial market above expectations in Korea.

The Japan traditional PC market came in ahead of forecast, but still slowed from the third quarter, as expected. Consumer shipments remained under pressure while the commercial segment was resilient, driving overall growth in the fourth quarter of 2016.

Vendor highlights

Lenovo continued to hold the top spot, though the competition with HP remains fierce. The top vendor still faced a tough climate in Asia Pacific excluding Japan but made significant strides in the holiday quarter in Europe and the Americas with a stronger performance in notebooks and capped the quarter growing globally at 1.7%, ending six consecutive quarters of on-year declines.

HP held the second position, growing 6.6% compared to the fourth quarter of 2015 for its third consecutive quarter of positive growth and shipping more than 15 million units for the first time since the fourth quarter of 2014. HP further consolidated its share in the US market, growing its market share to 31%. The company also saw sizable gains in EMEA and Asia Pacific excluding Japan.

Dell also had a productive quarter with shipments of just over 11 million (the first time it has done so since the fourth quarter of 2011) and growth of 8.2%. The number three vendor managed positive on-year growth in every region with strong notebook volume as well as a positive desktop quarter.

Apple was boosted by the launch of new MacBook Pro models during the fourth quarter. The company moved back into fourth place and stabilized global shipments.

Asustek growth slipped in the fourth quarter, particularly in the US, but remained in the top-5 globally, ranking number four for all of 2016.

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PC Market Stabilizes with Solid 4Q16 Shipments Despite Component Shortages, Says IDC