Business Demand Drives Strongest PC Market Since 2012

The world’s top five PC vendors all saw system shipments grow in the second quarter as Windows 10 upgrades fuel commercial sales, IDC and Gartner said.

PC sales

The long-struggling worldwide PC market hasn’t been this strong in more than six years, according to analysts with IDC and Gartner.

Businesses around the globe continued to upgrade their PCs in the second quarter of this year to Windows 10, fueling the strongest growth in the space since the first quarter of 2012, according to numbers released this week by both market research firms. In addition, the world’s five largest PC vendors—which includes Lenovo, which was helped by its new joint venture with Fujitsu—saw their dominance in the PC market increase, collectively growing their PC businesses by 7 percent and grabbing 78 percent of the entire market, according to IDC analysts.

Overall, IDC analysts said shipments of traditional PCs—which include desktops, notebooks and workstations—hit 62.3 million units in the second quarter, a jump of 2.7 percent, which far exceeded IDC’s forecast of 0.3 percent growth. Gartner analysts said the total of 62.1 million units sold in the quarter marked a 1.4 percent increase over the same period last year, the first year-over-year growth in six years.

The steady drop in PC shipments since early 2012 coincided with the fast growing popularity of smartphones—Apple’s first iPhone shipped in 2007—and the introduction two years earlier of Apple’s iPad, which kicked off a run on tablets from a wide array of vendors that flooded the market. As more functions were added to the devices, consumers in particular began to use them instead of their PCs for tasks such as web browsing.

Consumers and business users alike also began to hold onto their PCs longer, often keeping them for as long as four to five years and further slowing down demand for new systems.

According to Mikako Kitagawaa, principal analyst at Gartner, the trends generally kept steady, with the consumer sales declining while businesses continued to adopt new PCs as they migrated from Windows 7 to Windows 10.

"PC shipment growth in the second quarter of 2018 was driven by demand in the business market, which was offset by declining shipments in the consumer segment," Kitagawa said in a statement. "In the consumer space, the fundamental market structure, due to changes on PC user behavior, still remains, and continues to impact market growth. Consumers are using their smartphones for even more daily tasks, such as checking social media, calendaring, banking and shopping, which is reducing the need for a consumer PC.”

However, while businesses continue to carry the PC market, that momentum will weaken in two years as the drive to adopt Windows 10 systems peaks, she said, adding that “PC vendors should look for ways to maintain growth in the business market as the Windows 10 upgrade cycle tails off."

Jay Chou, research manager with IDC’s Personal Computing Device Tracker unit, said in a statement that while PCs “may not be the default device for many usage scenarios, the market continues to show pockets of resiliency as PC usage experience evolves and improves. Even certain types of desktops are seeing growth amid this business-driven refresh cycle."

Despite the steady decline of the global market, officials with top PC and component vendors as well as some industry analysts said they are confident the market will level off. While smartphones and tablets continue to gain capabilities, when it comes to running heavy business applications and creating content, users will continue to turn to PCs, they said.

Chip vendors and PC makers over the last several years have rolled out systems and components to handle such emerging workloads as virtual and augmented reality, data analytics and artificial intelligence, and new form factors such as convertibles and two-in-one systems—which can be used as both traditional PCs and tablets—have helped to drive sales.

OEMs have seen the results. HP in its fiscal year 2018 second quarter saw the number of PC shipments jump 7 percent and revenue grow 14 percent, to $8.8 billion. Lenovo in its latest quarter recorded 16 percent revenue growth for its PC and Smart Devices business group, and Dell officials have boasted about continued strength in the company’s PC business.

Analysts from both IDC and Gartner said the top five PC makers—HP, Lenovo, Dell, Apple and Acer—all saw gains in shipments in the quarter while shipments for the rest of the market fell from 7.3 percent (IDC) to 12.9 percent (Gartner). Both also noted the boost Lenovo got from the joint venture with Fujitsu, which took effect in the second quarter and helped with sales in the Japanese market.

Lenovo officials in September 2017 announced the company had bought a 51 percent stake in Fujitsu’s troubled PC business for $157 million and, in conjunction with the Development Bank of Japan, created a new company called Fujitsu Client Computing Ltd. Lenovo, which had lost the crown as the world’s largest PC maker earlier last year, tied HP for the title in the second quarter, with each holding 21.9 percent of the market, according to Gartner.