PC Shipments Continue Declines; Consumer Demand 'Muted': IDC

PC shipments, including desktops, notebooks and workstations, continued to decline in Q3, falling 15% year on year to 74.3 million, reported IDC Monday, citing “cooling demand and uneven supply.” Though volumes remain “well above” pre-COVID-19 pandemic levels when PC shipments were driven mostly by commercial refreshes, "consumer demand has remained muted,” said IDC analyst Jitesh Ubrani.

Promotional activity from Apple and other vendors helped “soften the fall and reduce channel inventory by a couple weeks across the board," Ubrani said. The supply chain reacted to new lows by reducing orders, except for Apple, which bumped up supply to make up for lost orders resulting from Q2 factory lockdowns in China, he said.

IDC will monitor how average selling prices (ASPs) trend in Q4, said analyst Linn Huang, saying shortages over the past couple of years have “aggressively driven product mix shifts towards the premium end.” That, combined with higher component and logistics costs, drove ASPs higher for five consecutive months to $910 in Q1, the highest level since 2004. But with demand slowing, promotions in full swing and orders being cut, the ASP trajectory was reversed in Q2, Huang said: Another quarter of ASP decline would indicate “a market in retreat.”

HP had the steepest PC shipment falloff in Q3, plummeting 27.8% to 12.7 million shipments, followed by Dell at minus 21.2% to 11.9 million. Lenovo’s shipments dropped 16.1% to 16.9 million, while Apple shipments rose 40.2% to 10 million. Fifth-place Asus' shipments slipped 7.8% in Q3 to 5.5 million, IDC said.

Canalys, meanwhile, reported Monday an 18% drop in desktop and notebook shipments to 69.4 million for Q3, citing weakness in the consumer and education segments exacerbated by more cautious spending at the enterprise level. Adverse macroeconomic and industry factors including high inflation, rising interest rates and “bloated channel inventories” dented the PC market’s momentum and are likely to persist into 2023, it said.

Notebook shipments suffered the most in the quarter, plunging 19% year on year to 54.7 million. Canalys said. Desktop shipments were more robust due to less reliance on consumer spending, falling 11% year-on-year to 14.7 million units, said the research firm.

Despite numbers similar to pre-pandemic shipments, “the rapid deterioration in demand across all segments is a worrying sign not only for vendors, but for stakeholders across the supply chain,” said Canalys analyst Ishan Dutt. Intel and AMD face “headwinds” due to slower PC demand and smaller component makers are cutting production and lowering earnings forecasts, Dutt noted.

Retail promotions helped clear inventory before the holiday season, but overall consumer demand for PCs “dwindled in the face of rising costs across other goods and services” at the same time education deployments shrunk, Dutt said. Commercial procurement, which had remained strong amid worsening economic conditions, is under threat due to slashed IT budgets, and businesses are “exhibiting greater caution” by extending PC refresh cycles, he said.

Strong employment and hiring numbers in major markets have been positive for the PC market, though indications that the trend could reverse “will further diminish commercial demand as the need for new PCs drops off,” Dutt said. Higher interest rates could also affect business investment. But the importance of PCs to support new workstyles and digital transformation goals “remains high,” said the analyst, and older devices in the installed base “will need to be replaced.” Canalys expects recovery in the commercial PC market in second-half 2023.