Largest PC Vendors See Gains as Shipment Declines Slow

PC shipments for Lenovo, HP, Dell and other top OEMs surge as tablets sales slow, IDC and Gartner analysts say.

Asus PC

The global PC market continues to improve as tablet sales flatten, and the largest vendors are seeing most of the benefits from the upswing.

Third-quarter numbers from IDC and Gartner analysts Oct. 8 show that the sales declines that have haunted the worldwide PC market for the past three year are slowing significantly, due in large part to a buying surge by businesses. At the same time, growing consumer sales in mature regions like North America and Western Europe are offsetting continued weakness in emerging markets, according to Mikako Kitagawa, principal analyst at Gartner.

"Consumers' attention is slowly going back to PC purchases as tablet adoption peaked with mainstream consumers," Kitagawa said in a statement. "The transition from PCs to tablets has faded as tablet penetration has reached the 40-50 percent range. In contrast, weakness in the emerging market reflects the saturation in selected consumer segments where they can afford PCs. In the meantime, consumers who don't have PCs will likely buy low-priced tablets. This is one of the major reasons for the slow growth in PC shipments in the emerging market."

Gartner analysts said that PC shipments in the third quarter hit 79.4 million units, a 0.5 percent decline from the same period last year. IDC analysts put the number at 78.5 million units, a 1.7 percent decline, though a significant improvement from the 4.1 percent decline they had forecast.

Many of the factors that were seen in the second quarter carried over into the third, according to analysts from both firms. Commercial PC sales continue to be strong as businesses look to refresh aging fleets of systems, and Microsoft's decision to end support of the Windows XP operating system is still contributing, though not to the degree as earlier in the year, they said. In addition, low-priced systems and the growing popularity of Chromebooks also are playing roles in the PC industry's revival.

Executives from PC and component makers, like Intel, also have said that new form factors—such as two-in-one systems—also are attracting buyers.

Reaping most of the benefits from the resurgence are the top five PC vendors, all of which saw increases in shipments over the same period in 2013, according to the analyst firms. Both firms had the Lenovo as the world's largest vendor, followed by Hewlett-Packard, Dell and Acer. Gartner had Asus as the fifth-largest vendor, while IDC said Apple was number five. Lenovo grew its leading market share to about 20 percent, according to IDC and Gartner.

While the top five vendors saw shipment gains—Gartner said those vendors accounted for two-thirds of all PCs shipped—the rest of the industry players saw shipments fall between 15.5 percent (Gartner) and 17.9 percent (IDC).

The scale a vendor brings increasingly plays a factor in how companies fare, and the fallout is being felt, according to Gartner. Sony officials in February announced that the company was selling its PC business—including the Vaio brand—to focus on mobile devices. In September, Samsung said it was exiting the European PC market and Toshiba said it was restructuring its PC business to concentrate on commercial systems.

Whether the resurgence in the PC space will keep is still to be determined. Much depends on the pricing of the systems, according to analysts with both firms.

"Consumers' wallets were gradually coming back to PCs, although the back-to-school sales season was not exceptional," Gartner's Kitagawa said. "More availability of affordable touch-based laptops, price drops of thin and light laptops, and two-in-one hybrid laptops will attract consumers this holiday season."

Jay Chou, senior research analyst for IDC's Worldwide PC Trackers, said that even though declines of PC shipments slowed in the third quarter, the numbers indicated it was historically a fairly weak quarter.

"The third quarter has historically been driven by back-to-school sales and renewed business purchasing, which were weaker than normal this year," Chou said in a statement. "The current growth of lower-priced systems, while encouraging in the short run, brings concern for the long-term viability of vendors to adequately remain in the PC space."