IDC PC shipments in Q1 faced their steepest drop known to date

If Windows 8 is the ticket to a bounce-back in PC sales, it's going to be a long, slow recovery. At least, as long as you ask IDC. It estimates that worldwide computer shipments in the first quarter of 2013 fell 13.9 percent to 76.3 million, which is the steepest quarterly drop the research firm has recorded since it started tracking PCs back in 1994. While the exact factors at work aren't clear, IDC blames it on a mix of customers spooked by Windows 8's unfamiliar interface, the continued rise of mobile devices, and the decline of the netbook. This isn't helped by the higher typical prices of touchscreen PCs, or by restructuring efforts at computing giants like Dell and HP.

Who's reigning in this apparently declining PC empire, then? Worldwide, it's a different picture than it was a few months ago: HP is back on top at 15.7 percent, followed by Lenovo, Dell, Acer and ASUS. The American climate is somewhat more familiar, with HP in front at 25.1 percent while being chased by Dell, Apple, Toshiba and Lenovo. With the exception of Lenovo, however, virtually all of the manufacturers involved saw at least some decline in their PC shipments. To IDC, that's a sign that vendors and Microsoft need to find an antidote to the crazes for smartphones and tablets -- and find it quickly.

IDC PC shipments in Q1 faced their steepest drop known to date

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PC Shipments Post the Steepest Decline Ever in a Single Quarter, According to IDC

FRAMINGHAM, Mass.--(BUSINESS WIRE)--Worldwide PC shipments totaled 76.3 million units in the first quarter of 2013 (1Q13), down -13.9% compared to the same quarter in 2012 and worse than the forecast decline of -7.7%, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. The extent of the year-on-year contraction marked the worst quarter since IDC began tracking the PC market quarterly in 1994. The results also marked the fourth consecutive quarter of year-on-year shipment declines.

"At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market"
Despite some mild improvement in the economic environment and some new PC models offering Windows 8, PC shipments were down significantly across all regions compared to a year ago. Fading Mini Notebook shipments have taken a big chunk out of the low-end market while tablets and smartphones continue to divert consumer spending. PC industry efforts to offer touch capabilities and ultraslim systems have been hampered by traditional barriers of price and component supply, as well as a weak reception for Windows 8. The PC industry is struggling to identify innovations that differentiate PCs from other products and inspire consumers to buy, and instead is meeting significant resistance to changes perceived as cumbersome or costly.

"At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," said Bob O'Donnell, IDC Program Vice President, Clients and Displays. "While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices. Microsoft will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market."

The impact of slow demand has been magnified by the restructuring and reorganizing efforts impacting HP and Dell. Lenovo remains a notable exception as it continues to execute on a solid "attack" strategy. Mid- and bottom-tier vendors are also struggling to identify growth markets within the U.S. Among the most vulnerable group of vendors are the whitebox system builders, which are undergoing consolidation that is affecting shipments as well as the distribution sector.

"Although the reduction in shipments was not a surprise, the magnitude of the contraction is both surprising and worrisome," said David Daoud, IDC Research Director, Personal Computing. "The industry is going through a critical crossroads, and strategic choices will have to be made as to how to compete with the proliferation of alternative devices and remain relevant to the consumer. Vendors will have to revisit their organizational structures and go to market strategies, as well as their supply chain, distribution, and product portfolios in the face of shrinking demand and looming consolidation."

Regional Highlights

United States – The U.S. market had another dismal quarter in 1Q13, contracting -12.7% year on year, with a drop of -18.3% compared to the fourth quarter of 2012. With total volume falling to 14.2 million, quarterly shipments reached their lowest level since the first quarter of 2006. With this latest figure, the U.S. is now in its tenth consecutive quarter of year-on-year contraction (excluding a brief moment of growth – less than 2% year on year – in 3Q11).

EMEA – As expected, Europe, Middle East and Africa (EMEA) remained constrained, posting a stronger double-digit decline than anticipated in the first quarter of 2013. Results fell short of expectations in the consumer segment as softness in demand persisted amid a continued shift to tablets and ongoing budget pressures. Meanwhile, the market response to Windows 8 and touch-enabled devices remained slow, leading to cautious sell-in from most vendors. Shipments in the commercial market remained constrained as predicted, following continued economic pressure and lack of major IT renewals.

Japan – PC shipments were in line with expectations in the first quarter. Some economic improvement is helping to support commercial replacement demand ahead of the scheduled end of support for Windows XP next year. However, consumer shipments remained very weak.

Asia/Pacific (excluding Japan) (APeJ) – PC shipments in APeJ declined sharply, dropping a record -12.7% year on year, the first time the region has experienced a double-digit decline. Although much of the earlier Windows 7 stock had cleared, a lukewarm reception toward Windows 8 hampered new shipments. China's inactivity contributed heavily to the decline, as public sector spending continued to be constrained.

Vendor Highlights

HP remained the top vendor, but posted a substantial double-digit decline in shipments after an aggressive fourth quarter kept growth flat during the holidays. HP's worldwide shipments fell more than -23% year on year in 1Q13, with significant declines across all regions, as internal restructuring continued to affect commercial sales. Although HP maintained its leadership position in the United States, the company saw U.S. shipments fall -22.9% from a year ago.

Lenovo remained second in global shipments and nearly closed the gap with HP. Lenovo continued to outpace the market, notably expanding shipments with its attack strategy. In the United States, Lenovo outperformed the market with double digit year-on-year growth compared to the market's double-digit contraction. Shipments in Asia/Pacific declined, however, keeping Lenovo's overall growth flat.

Dell saw shipments decline by more than -10% globally and -14% in the United States. The vendor continued to face tough competition and struggled with customer uncertainty about the direction of its restructuring. Nevertheless, the decline in shipments was smaller than the past few quarters, and its sales to Asia/Pacific returned to positive growth.

Acer Group continued to see substantial declines in shipments across regions. As the leader in Mini Notebook shipments, the vendor has been particularly exposed to the decline in these systems. Slow consumer and SMB growth has also taken a toll. In a sequential comparison, Acer's market share rose slightly to 8.1% in 1Q12 from 8.0% in 4Q12, halting its market share decline.

ASUS managed some growth in the United States, but saw a substantial decline in EMEA and Asia/Pacific. The company's substantial surge in Americas shipments in the second half of 2012 gave way to limited growth as demand weakened.

Apple fared better than the overall U.S. market, but still saw shipments decline as its own PCs also face competition from iPads.

Toshiba also saw shipments decline in the United States, but fared better than the overall market, benefiting somewhat from the restructuring of market leaders HP and Dell.

Top 5 Vendors, Worldwide PC Shipments, First Quarter 2013 (Preliminary)

(Units Shipments are in thousands)

Vendor

1Q13
Shipments

1Q13 Market
Share

1Q12
Shipments

1Q12 Market
Share

1Q13/1Q12
Growth

1. HP 11,997 15.7% 15,726 17.7% -23.7%
2. Lenovo 11,700 15.3% 11,705 13.2% 0.0%
3. Dell 9,010 11.8% 10,110 11.4% -10.9%
4. Acer Group 6,150 8.1% 8,952 10.1% -31.3%
5. ASUS 4,363 5.7% 5,401 6.1% -19.2%
Others 33,075 43.4% 36,739 41.5% -10.0%
Total 76,294 100.0% 88,635 100.0% -13.9%

Source: IDC Worldwide Quarterly PC Tracker, April 10, 2013

Table notes follow the last table.

In addition to the table above, a graphic showing year-on-year shipment growth for the worldwide PC market over the previous five quarters is available on IDC.com. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

Top 5 Vendors, United States PC Shipments, First Quarter 2013 (Preliminary)

(Units Shipments are in thousands)

Vendor

1Q13
Shipments

1Q13 Market
Share

1Q12
Shipments

1Q12 Market
Share

1Q13/1Q12
Growth

1. HP 3,570 25.1% 4,632 28.5% -22.9%
2. Dell 3,074 21.7% 3,590 22.1% -14.4%
3. Apple 1,418 10.0% 1,533 9.4% -7.5%
4. Toshiba 1,279 9.0% 1,349 8.3% -5.2%
5. Lenovo 1,274 9.0% 1,127 6.9% 13.0%
Others 3,581 25.2% 4,022 24.7% -11.0%
Total 14,197 100.0% 16,255 100.0% -12.7%

Source: IDC Worldwide Quarterly PC Tracker, April 10, 2013

Table Notes:

* Some IDC estimates prior to financial earnings reports.
* Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.
* PCs include Desktops, Portables, Mini Notebooks, and Workstations and do not include handhelds, x86 Servers and Tablets (i.e. iPad and Android-based Tablets with detachable keyboards). Data for all vendors are reported for calendar periods.

IDC's Worldwide Quarterly PC Tracker gathers PC market data in over 80 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.