Yahoo Finance Can the PC Market Bounce Back From the Cuurent Lows?
Global PC sales, which rebounded and soared during the peak of the pandemic, started slowing with the economic reopening. Sales have slowed further this year as the industry continues to face multiple challenges.
Supply-chain crisis, which has been hampering sales, somewhat eased last year, but higher prices are now plaguing sales. Almost all major players saw a steep decline in PC sales in the first quarter of 2023.
PC Sales See Steep Decline
The COVID-19 outbreak impacted a large number of industries but, at the same time, also proved to be a boon in disguise for several others. The PC industry emerged as one of the biggest beneficiaries of the pandemic. However, things have changed since then, with sales declining almost every quarter.
According to a report from Gartner, global PC shipments plummeted 30% year over year in the first quarter of 2023. Total PC shipments during the quarter totaled 55.2 million units.
This follows a 28.5% decline in the fourth quarter of 2022, when global PC shipments totaled 65.3 million units. Understandably, the crisis is worsening for the industry, with shipments plummeting almost every quarter.
The report also mentioned that during the quarter, the top global vendors remained unchanged, with Lenovo Group Limited LNVGY holding the top spot. However, all top vendors saw a steep decline in sales.
The Gartner report is quite similar to the IDC report on PC shipments. According to IDC, global PC shipments totaled 56.9 million units, declining 29% year over year in the first quarter of 2023.
Challenges Galore
With the decline in shipments, market leaders are suffering the most, despite holding on to the top positions. According to market share, Lenovo held the top spot with a 23.9% market share, HP Inc. HPQ commands 21.5%, followed by Dell Technologies Inc DELL, which holds 16%, while Apple, Inc. AAPL had 7.5%.
Lenovo recently reported that its revenues declined 24% year over year to $15.3 billion, owing to a massive downturn in PC and smartphone industries in the final quarter of 2022. In the first quarter of 2023, LNGVY recorded a meager 12.7 million units of shipments. Lenovo’s shipments declined 30.3% in the quarter on a year-over-year basis. LNGVY has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HP, Inc. reported a net income of $487 million in the first quarter of 2023 but also said that its PC and laptop sales declined drastically. HPQ’s PC unit recorded revenues of $9.2 million in the first quarter, down 24.2% year over year. According to the IDC report HP, Inc. shipped only 12 million units.
Dell Technologies held its position as the third biggest player but shipped only 12 million units of PCs. DELL saw a 31% decline in shipments in the first quarter of 2023 on a year-over-year basis.
Apple was the biggest loser, with a 40.5% year-over-year decline in shipments. AAPL shipped only 4.1 million units during the quarter. The company shipped 2.8 million fewer devices in the first quarter on a year-over-year basis.
The U.S. PC market, one of the biggest in the world, fell 25.8% in the first quarter on a year-over-year basis. This follows a 20.5% decline in the fourth quarter of 2022. Slowing laptop sales are hurting the entire U.S. PC industry.
The sector is dealing with a number of other challenges, with price being the biggest factor. Americans have cut down on spending on pricey goods amid high inflation. Although the supply-chain issue started to improve in the third quarter, the continued drop in demand in both consumer and commercial markets is now raising new concerns.
According to the IDC report, supply chains can adapt as PC OEMs look into manufacturing options outside of China owing to the slowdown in growth and demand. Also, PC manufacturers are simultaneously altering their strategies for the remainder of the year and making orders for Chromebooks, anticipating a jump in license fees later this year.
According to analysts, the struggle for PC manufacturers will continue for a while, but the market is expected to rebound by the end of this year once the global economy improves and users consider upgrading to Windows 11.
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