Is the Personal Computer going the way of SMS?

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PCs aren’t being very popular gadgets these days. Why surprised, isn’t the world too busy in between figuring out virtual worlds inside Virtual Reality (VR) sets and IoT-wonder-devices playing ‘Genie’ and getting all your stuff done? A Gartner Inc. report has figures to tell on global PC shipments. It looks grim.

In the fourth quarter of 2017, the total shipment figured 71.6 million units, a sharp 2 percent decline from the fourth quarter of 2016. For the year, 2017 PC shipments surpassed 262.5 million units, a 2.8 percent decline from 2016. It was the 13th consecutive quarter of declining global PC shipments, as well as the sixth year of annual declines.

Grey days do show up, but it is not raising sirens for Personal Computers yet, not at all.

The report is geographically different as Mikako Kitagawa, principal analyst at Gartner says that there was only a moderate shipment decline in the EMEA. Shipments in Asia-Pacific, Japan, and Latin America has anyway witnessed growth in the same quarter of 2017, but then, of course, it is the US PC market that this seeing greyest clouds hovering.

So where is the silver lining?

Monopoly is mortal. Hence, every successful technology and devices that rule over a time is taken over by newer trends and are either moved out of the shelf or transformed into newer avatars.  This does not however mean that PCs will disappear from household’s altogether, assures Kitagawa. “PC buyers will look for quality and functionality rather than looking for the lowest price, which will increase PC average selling prices (ASPs) and improve profitability in the long run. However, until this point is reached, the market will have to go through the shrinking phase caused by fewer PC users.”

Gartner-PC-Shipments

What went wrong with PCs?

 

Weak consumer demand in the US:

In the U.S., PC shipments surpassed 15.2 million units in the fourth quarter of 2017, an 8 percent decline from the fourth quarter of 2016. HP Inc. was the only vendor to increase shipments in the quarter. The decline was attributed to weak consumer demand despite holiday season sales. “U.S. holiday sales were filled with popular products, such as voice-enabled speakers, and newly released smartphones,” Kitagawa pointed.

Blame the Newer Hi-Performing Technologies:

In an ailing market of the U.K. and Germany, PC revenue is expected to be up year over year in Western Europe. The rise in ASPs is due to currency fluctuations, the need for vendors to offset rising component costs, and a product-mix shift toward higher-value items, such as gaming systems and high-performing notebooks.

China Saved the day for PC Market in Asia/Pacific:

China experienced its first positive PC shipment growth since the first quarter of 2012. The success of the 11.11 shopping festival and the continuing demand for PCs in the commercial market drove the China PC market to 1.1 percent growth in the quarter. The Asia/Pacific PC market totaled 25 million units in the fourth quarter of 2017, a 0.6 percent increase from the fourth quarter of 2016. The consumer market stabilized with fourth-quarter online promotions in many countries, which drove demand for gaming PCs and thin and light notebooks.

PC Market Consolidation in 2017:

For the year, worldwide PC shipments totaled 262.5 million units in 2017, a 2.8 percent decrease from 2016. As the PC industry continues to consolidate, the top four vendors in 2017 accounted for 64 percent of global PC shipments. In 2011, the top four vendors accounted for 45 percent of PC shipments.

“The top vendors have taken advantage of their volume operations to lower production costs, pushing small to midsize vendors out of the market,” Kitagawa said.

Players Still on Ground:

  • HP Inc. moved into the No. 1 position in the fourth quarter of 2017, as its shipments grew 6.6 percent, and its market share totaled 22.5 percent (see Table 1). The company showed year-over-year growth in all regions, including the challenging U.S. market.
  • For the fourth consecutive quarter, Lenovo experienced a decline in shipments. Lenovo had moderate growth in EMEA and Asia/Pacific, but shipments declined in North America.
  • Dell’s shipments grew slightly in the fourth quarter of 2017. Dell did well in EMEA, Asia/Pacific, and Latin America, but it had weak results in North America. Generally, Dell has put a higher priority on profitability over market share.

Table 1

Preliminary Worldwide PC Vendor Unit Shipment Estimates for 4Q17 (Thousands of Units)

Company 4Q17 Shipments 4Q17 Market Share (%) 4Q16 Shipments 4Q16 Market Share (%) 4Q17-4Q16 Growth (%)
HP Inc. 16,076 22.5 15,084 20.7 6.6
Lenovo 15,742 22.0 15,857 21.7 -0.7
Dell 10,841 15.2 10,767 14.7 0.7
Apple 5,449 7.6 5,374 7.4 1.4
Asus 4,731 6.6 5,336 7.3 -11.3
Acer Group 4,726 6.6 4,998 6.8 -5.4
Others 13,990 19.6 15,599 21.4 -10.3
Total 71,556 100.0 73,015 100.0 -2.0

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads. All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels. Source: Gartner (January 2018)

Just as Instant Messaging hasn’t killed the importance of SMS yet, but SMS now got more specific purpose-driven jobs to do (you understand the importance of OTPs right?), PCs are expected to be more quality and functionality oriented now on. No worries old schools, they are here to stay.

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