Components suppliers to the personal PC market face the possibility of further sales declines as the sector continues to suffer sluggish global demand with more consumers opting for smartphones and low-cost tablets as their primary tools for accessing the web.
Technology consultant Gartner Inc. said worldwide PC sales sank 10.9 percent in the second quarter, dropping to 76 million units from more than 85 million in the comparable quarter of 2012 with all the top suppliers declining either fractionally or by a whopping 35 percent in the case of Acer and more than 20 percent for Asus.
PC sales have declined in the last five consecutive quarters and the drop could continue in future periods as there are no obvious catalyst that could propel unit shipments higher over the next year. Gartner analysts said the erosion in PC sales could be directly attributed to rising demand for tablets especially in developing economies where lower-priced computing equipment are being favored by consumers.
“We are seeing the PC market reduction directly tied to the shrinking installed base of PCs, as inexpensive tablets displace the low-end machines used primarily for consumption in mature and developed markets,” said Mikako Kitagawa, principal analyst at Gartner in a statement. “In emerging markets, inexpensive tablets have become the first computing device for many people, who at best are deferring the purchase of a PC. This is also accounting for the collapse of the mini notebook market.”
The changing fortunes of the top PC vendors will likely heavily impact their major component suppliers and contract manufacturers. Shares in all the top suppliers and many of their suppliers initially fell after Gartner announced the shipment report on Wednesday although HP pulled back to close slightly higher. Expectations have been muted for the PC sector since unit shipments began sliding more than one year ago and although the companies participating in the sector continue to face market pressures, investors seem to be largely ignoring the negative news. The stock price of Intel Corp., the world’s biggest microprocessor vendor whose business centers on PCs, fell in intra-day trading on Wednesday but quickly recovered to close a few cents higher.
All PC vendors seem to have been hit hard in the second quarter although some suffered more than others. Even shipments at Apple Inc., which had recently experienced a resurgence in demand for its Macintosh computers, slipped in the recent quarter. The company did not make the top 5 global PC vendor list although it was No. 3 in the United States behind HP and Dell. The U.S. personal computer market declined the least in the second quarter, dropping 1.4 percent, to about 15 million units from 15.2 million in the second quarter of 2012. Apple’s shipment fell 4 percent to 1.7 million units from 1.8 million, according to Gartner. Shipment in Europe, Middle East and Asia fell almost 17 percent.
“While Windows 8 has been blamed by some as the reason for the PC market’s decline, we believe this is unfounded as it does not explain the sustained decline in PC shipments, nor does it explain Apple’s market performance,” Kitagawa said.