PC Sales Slide as Chip Costs Drive Prices Up

Release time:2017-07-14
source:Dylan McGrath

Shipments of traditional PCs slide by 3.3 percent in the second quarter as increased costs for components such as DRAM and flash memory began driving the price of systems higher, according to market research firm International Data Corp. (IDC).

PC shipments have been declining regularly for the past five years. The year-over-year decrease of 3.3 percent was actually slightly better than the 3.9 percent decline that IDC had previously forecast. Sequentially, shipment volume increased only slightly compared to the first quarter, breaking the typical norm of significant sequential growth from the first quarter to the second.

Jay Chou, a research manager with IDC’s worldwide PC device tracker, said in a press statement that the PC market continues a trend toward stabilization.

"Despite recent issues wrought by component shortages and its effect on system prices, we expect the momentum of commercial market replacements will contribute to eventual market growth,” Chou said.  “Consumer demand will remain under pressure, although growth in areas like PC gaming and the increasingly attractive portfolio of sleek Windows-based systems will help push the consumer market to stabilize as well."

Estimated second quarter PC shipments by vendor in thousands of units. Click here for larger image
Estimated second quarter PC shipments by vendor in thousands of units.
Click here for larger image

IDC said an inventory buildup caused by shortages of key components such as solid state drives eased in the second quarter. But the market research firm said shortages of components such as memory chips—both DRAM and flash memory prices are increasing under capacity constraints—drove increases in the typical PC bill of materials (BOM), adding to the headwinds causing repeated PC shipment declines.

From a regional perspective, mature markets generally outperformed emerging markets, with the Asia/Pacific region and Latin America showing weakness, IDC said. Shipments in the U.S. declined only slightly but otherwise did better than expected due largely to sales of Chromebooks, IDC said.

Among global PC vendors, Hewlett-Packard Co. led in shipments for a second straight quarter, hitting a new market share high of 23 percent after achieving aggressive growth in virtually all regions, IDC said. China’s Lenovo was again No. 2 in PC shipment in the second quarter despite a 5.7 percent year-over-year decline in shipments, the market research firm said. 

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Worldwide PC shipments totaled 68.6 million units in the fourth quarter of 2018, a 4.3 percent decline from the fourth quarter of 2017, according to preliminary results by Gartner, Inc. For the year, 2018 PC shipments surpassed 259.4 million units, a 1.3 percent decline from 2017. Gartner analysts said there were signs for optimism in 2018, but the industry was impacted by two key trends.“Just when demand in the PC market started seeing positive results, a shortage of CPUs (central processing units) created supply chain issues. After two quarters of growth in 2Q18 and 3Q18, PC shipments declined in the fourth quarter,” said Mikako Kitagawa, senior principal analyst at Gartner. “The impact from the CPU shortage affected vendors’ ability to fulfill demand created by business PC upgrades. We expect this demand will be pushed forward into 2019 if CPU availability improves.”“Political and economic uncertainties in some countries dampened PC demand,” Ms. Kitagawa said. “There was even uncertainty in the U.S. — where the overall economy has been strong — among vulnerable buyer groups, such as small and midsize businesses (SMBs). Consumer demand remained weak in the holiday season. Holiday sales are no longer a major factor driving consumer demand for PCs.”The top 3 vendors boosted their share of the global PC market as Lenovo, HP Inc. and Dell accounted for 63 percent of PC shipments in the fourth quarter of 2018, up from 59 percent in the fourth quarter of 2017 (see Table 1).Lenovo surpassed HP Inc. to move into the No. 1 position in the global PC market in the fourth quarter of 2018. A major factor for Lenovo’s share gain was credited to a joint venture with Fujitsu formed in May 2018. Lenovo also had a strong quarter in the U.S. The company has recorded three consecutive quarters of double-digit year-over-year shipment growth, despite the stagnant overall market.The fourth quarter of 2018 was a challenging one for HP Inc. The company experienced a shipment decline after four consecutive quarters of growth. HP Inc.’s shipments declined in most key regions, except Asia/Pacific and Japan. Dell registered positive growth as the company outperformed in EMEA and Japan, but it experienced a decline in Asia/Pacific and Latin America.In the U.S., PC shipments totaled 14.2 million units in the fourth quarter of 2018, a 4.5 percent decline from the fourth quarter of 2017 (see Table 2). Four of the top six vendors experienced a decline in U.S. PC shipments in the fourth quarter of 2018. Lenovo’s growth was well above the U.S. average while Dell’s shipments increased slightly compared with a year ago. The overall decline in the U.S. was attributed to weak consumer demand despite holiday season sales as well as SMBs.“The fourth quarter is typically a buying season for small office/home office (SOHO) and small business buyers in the U.S. as they want to use up the untouched budget before the tax year ends,” said Ms. Kitagawa. “Our early indicator showed that SOHO and small business buyers held off on some new PC purchases due to uncertainties around the political and economic conditions.”PC shipments in EMEA totaled 20.9 million units in the fourth quarter of 2018, a 3.8 percent decline year over year. There were some positive signs, such as in Western Europe’s demand for desktops and ultramobiles that fueled SMB shipments, while the government sector also benefited from further Windows 10 renewals. Demand in Russia continued to recover, and some parts of Eastern Europe, such as the Czech Republic and Hungary. However, demand was not strong enough to offset declining shipments to consumers.The Asia/Pacific PC market totaled 24.2 million units in the fourth quarter of 2018, a 4.6 percent decline from the fourth quarter of 2017. Due to uncertainties of the U.S.-China trade relations, and the volatile equity market, there was cautionary demand, especially among consumers and the SMB segment. In the fourth quarter of 2018, PC shipments in China declined 2.5 percent year over year, but shipments grew 5.6 percent sequentially.Seventh Consecutive Year of Worldwide PC Shipment DeclineFor the year, worldwide PC shipments totaled 259.4 million units in 2018, a 1.3 percent decrease from 2017 (see Table 3). This was the seventh consecutive year of global PC shipment decline, but it was less steep compared with the past three years.“The majority of the PC shipment decline in 2018 was due to weak consumer PC shipments. Consumer shipments accounted for approximately 40 percent of PC shipments in 2018 compared with representing 49 percent of shipments in 2014,” Kitagawa said. “The market stabilization in 2018 was attributed to consistent business PC growth, driven by Windows 10 upgrade.”These results are preliminary. Final statistics will be available soon to clients of Gartner’s PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe.
2019-01-18 00:00 reading:355
Combined shipments of PCs, tablets and smartphones are projected to decline in 2017 for the third consecutive year as a lull in new technologies being brought to market continues to stifle consumer demand, according to market research firm Gartner Inc. However, the rate of decline for new device shipments is expected to decline considerably this year, and the incorporation of new technologies such as artificial intelligence (AI) and virtual personal assistance (VPA) in more products is forecast to drive considerable growth in future years, the market research firm said. Gartner expects combined shipments of PCs, tablets and smartphones to decline by just 0.3 percent this year to 2.3 billion units. By contrast, combined shipments of these devices declined by 3 percent in 2016 and nearly 1 percent in 2015. The market research firm expects combined device shipments to return to growth next year. Currently there are about 7 billion units of smartphones, tablets and PCs installed globally. While Gartner expects technologies such as AI and VPA to increase adoption of these devices over the next three years, early iterations have not had significant impact. "Today, the user experience with new technologies such as AI and VPAs is too often below the standard found in the rest of the device, and the cost to raise the standard quickly is prohibitive, relative to the benefits," said Ranjit Atwal, a research director at Gartner, in a press statement. Atwal said the device market will continue to be driven in the near term by incremental advances in traditional technology. "Looking three or four years ahead, the device market will begin to see very significant shifts in both usage patterns and form factors, especially as 5G wireless technology is introduced," Atwal said. Worldwide device shipments by device type in millions of units. The ultramobile (premium) category includes devices such as Microsoft Windows 10 Intel x86 products and the Apple MacBook Air. The ultramobile (basic and utility) category includes devices such as the Apple iPad and iPad mini, Samsung Galaxy Tab S2, Amazon Fire HD, Lenovo Yoga Tab 3 and Acer Iconia One.
2017-07-06 00:00 reading:328
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