In the years leading up to 2020, the personal computer (PC) was left in the dust by the smartphone revolution. But when the COVID-19 pandemic hit and office workers’ daily commutes transformed from miles to feet, the humble PC emerged as the star of the show.
However, it looks like the PC party may be over — for now.
Statista’s Thomas Alsop captures slowing PC dynamics like this: “The slowdown in the global economy observed in 2022 had a detrimental impact on the PC market, with shipments falling by over 16 percent as compared to the previous year and by as much as 29 percent in the final quarter of the year alone. Following strong growth through the pandemic as consumers and enterprises purchased new devices, device spending was forecast to fall by five percent in 2023 as buyers lengthen PC refresh cycles – a trend that is expected to last until late 2023 or early 2024.”
According to recent data from market intelligence firm International Data Corporation (IDC), PC trends like those may not be improving anytime soon.
A bumpy Q1 for PCDs
In its overview of the PCD (personal computing devices) market for the first quarter of this year, IDC said that worldwide year over year (YoY):
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PCD shipments declined 25.8%
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PCs contracted by 28.8%
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Tablets declined by 19.4%
“Weak demand, excess inventory, and a worsening macroeconomic climate were all contributing factors for the precipitous drop in shipments,” IDC said. “… These results also represented a coda to the era of COVID-driven demand and at least a temporary return to pre-COVID patterns.”
Noting that average selling prices (ASPs)rose “dramatically” over the past two years due to “component shortages, inflation, logistics disruptions, and rapid product mix shifts,” IDC said current prices have dropped as PC makers scramble to unload excess inventory.
“We expect this to continue throughout the year with ASPs projected to decline 2.8% to $700,” the firm added. “This would mark the first ASP decline for a full year since 2015.”
However, even with steep discounts applied to their wares, channels and PC makers “can expect elevated inventory to persist into the middle of the year and potentially into the third quarter,” IDC said.
But the good news is that although IDC says PC shipments will “likely suffer in the near term,” market growth may return toward the end of 2023 with hopes for a better global economy and “as the installed base begins to think about upgrading to Windows 11.”
“As employees return to the office around the world and as consumers continue to be cautious of their expenditure, the market continues to witness weakening demand,” IDC said. “However, with signs of global economic recovery, including easing inflation, the second half of 2023 may witness some improvements in the shipments.”
Although the rocky Q1 data led IDC to lower its forecast for global PC and Tablet shipment volumes to reach 384.8 million in 2023 (down 15.2% compared to last year), the firm said it expects the market “to rebound in 2024 with global volumes reaching 403.1 million during the year and growing to 425 million by the end of 2027.”
“As the global economy has continued to struggle, consumers have tightened spending and commercial buyers are delaying purchases,” IDC said. “Consumer demand is at risk of perishing as they revert to pre-pandemic habits where the PC wasn’t at the center of their daily computing needs, However, commercial buying is expected to ramp up during 2024 and will help the PC market grow beyond pre-pandemic levels.”
IDC also noted that the “pause in growth and demand” is also providing a little elbow room for the supply chain to make adjustments “as many factories begin to explore production options outside China.”
Q2: More of the same for PCs
According to preliminary results from IDC’s Worldwide Quarterly Personal Computing Device Tracker published on July 10, PC shipments in Q2 were still down YoY, declining at a rate of 13.4%.
“This was the sixth consecutive quarter of contraction brought on by macroeconomic headwinds, weak demand from both the consumer and commercial sectors, and a shift in IT budgets away from device purchases,” IDC said in the announcement.
The firm also noted that despite the poor results, market performance outpaced Q2 forecasts. However, no PC company has been “immune to the challenges presented by the market.”
“Except for Apple and HP Inc., all the leading companies experienced double-digit declines during the quarter,” IDC said. “But Apple benefited from a favorable year-over-year comparison as the company suffered supply issues during 2Q22 due to COVID-related shutdowns within the supply chain. Meanwhile, HP has faced an oversupply of inventory in the past year and is finally approaching normalized levels of inventory, allowing its growth rate to shine during this downturn.”
“Elevated channel and component inventory are once again dragging down the market,” said Jitesh Ubrani, research manager for IDC’s Mobility and Consumer Device Trackers in the statement. “And despite these issues slowly easing, many component suppliers continue to offer reduced pricing in an effort to clear their inventory though PC makers and channels are still cautious about new systems due to the reduced demand.”
“The roller coaster of supply and demand the PC industry has faced over the past five years has been extremely challenging,” said Ryan Reith, group vice president for IDC’s Client Device Trackers. “Companies don’t want to be caught with short supply like they were in 2020 and 2021, but at the same time, many seem hesitant to make the big bet on a market rebound. On the consumer side, we’re seeing a return to pre-pandemic habits where computing needs are shared across multiple devices, and we firmly believe the consumer wallet will favor smartphones over the PC. On the commercial side, workforce reductions (for many big companies) as well as the introduction of generative AI only add more confusion as to where to place an already reduced budget.”
