IDC and Gartner: Lenovo leaps past Dell for second place, still trails HP for the gold

IDC and Gartner have come out with their latest Q3 rankings of the world's PC manufacturers, which means it's time for us to do some dissecting. Not much changed at the top of the heap, where, according to IDC, HP still rules the roost with about 18 percent market share (despite that whole PC biz spinoff thing). But the most dramatic shift came from Lenovo, which scurried past Dell for second place, with 13.7 percent market share (13.5, according to Gartner) -- a 36.1 percent jump from the third quarter of 2010 (25.2 percent, says Gartner). Dell's pie slice, on the other hand, shrunk slightly to 12 percent this quarter, down from 12.6 percent last year. On the global scale, meanwhile, PC sales increased by about 3.6 percent compared to Q3 2010 (3.2 percent, in Gartner's books), though both research firms acknowledged that this figure was well below their respective projections. Why? IDC points to several economic factors, including the threat of a double-dip recession, while Gartner blames the rise of "non-PC devices," including tablets. Surprise!

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Gartner Says Worldwide PC Shipments Grew 3.2 Percent in Third Quarter of 2011

For the First Time, Lenovo Moved Into the No. 2 Position and Asus Became the No. 5 Vendor

STAMFORD, Conn., Oct 12, 2011 (BUSINESS WIRE) -- Worldwide PC shipments totaled 91.8 million units in the third quarter of 2011, a 3.2 percent increase from the third quarter of 2010, according to preliminary results by Gartner, Inc. These results are slightly lower than Gartner's earlier projection of 5.1 percent growth for the quarter. The EMEA region contributed to lower-than-expected growth led by a weak Western European market.

"The inventory buildup, which slowed growth the last four quarters, mostly cleared out during the third quarter of this year; however, the PC industry has been performing below normal seasonality," said Mikako Kitagawa, principal analyst at Gartner. "As expected, back-to-school PC sales were disappointing in mature markets, confirming that the consumer PC market continues to be weak. The popularity of non-PC devices, including media tablets, such as the iPad and smartphones, took consumers' spending away from PCs.

"As the PC market faced a slowdown, vendor consolidation has become a more apparent trend in the industry. Lenovo's recent merger with NEC, and its acquisition of Medion, as well as HP's announcement that it may spin off or sell its PC business, underlined this trend during the quarter."

HP, the No. 1 vendor based on global PC shipments, grew faster than the industry average, and its market share reached 17.7 percent in the third quarter of 2011 (see Table 1). Despite announcing in the middle of 2Q11 the potential spinoff of its PC business, HP experienced strong growth in the U.S., while outside the U.S., growth was relatively weak or average.

Lenovo became the second-largest PC vendor in the worldwide market for the first time. The company's expansion was boosted in part by the joint vendor with NEC in Japan. However, its aggressive marketing to both the professional and consumer PC markets accelerated its shipment volume.

Dell's performance was below the industry average in most regions, as the company faced intensified competition in the professional space, where Dell has been traditionally strong. Acer mostly cleared its inventory buildup in the EMEA region by the third quarter of 2011. However, channels have been adopting a conservative position in regard to placing orders following the inventory issues. Asus widened the gap with Toshiba, the sixth-largest vendor. Asus achieved strong growth in China.

In the U.S., PC shipments totaled 17.8 million units in the third quarter of 2011, a 1.1 percent increase from the third quarter of 2010. The U.S. PC market experienced year-over-year growth for the first time in three quarters. While the consumer market continued to be weak with disappointing back-to-school sales in the third quarter, the inventory was kept mostly in check as industry expectations were relatively low.

"The main contributor to the weak consumer PC market in the U.S. was intensified competition for consumers' money," Ms. Kitagawa said. "Media tablets and smartphones took center stage in the U.S. retail sector, and the expectation is for continuing demand for these devices throughout the holiday season."

HP showed strong growth in the U.S. PC market, as shipments increased 15.1 percent in the third quarter, and its market share totaled 28.9 percent (see Table 2). Despite the potential spinoff of its PC business, HP executives' efforts to give the appearance of "business as usual" seemed to work in the quarter.

Dell struggled as shipments declined 7.2 percent in the third quarter of 2011. "Dell's issue has been balancing profitability and market share gain, a difficult task in a PC industry where high volumes and low margins are the norm," Ms. Kitagawa said.

Gartner's early study shows that Apple experienced the strongest growth among the top five vendors in the U.S. PC market. Apple's PC shipments increased 21.5 percent in the third quarter of 2011. The robust growth of the MacBook Air continued to lead Apple's overall growth in the U.S. market.

PC growth in EMEA reached 26.6 million units in the third quarter of 2011, a 2.9 percent decline from the second quarter of 2010. It was the third consecutive quarter that the EMEA region has experienced negative growth. However, analysts said vendors may have seen the end of backed-up inventory issues, which have been pulling down growth. The consumer PC market in Western Europe remained weak, with consumer confidence permanently shaken by the economic issues spreading across most of the region. Furthermore, the market share of mini-notebooks continued to decline, especially in Western Europe, which also contributed to the weak year-over-year comparison.

In Asia/Pacific, PC shipments reached 31.8 million units in the third quarter of 2011, a 6 percent increase from the same period last year. Vendors continued to stimulate demand aggressively with promotions and prices, benefiting buyers looking for good prices. It also provided an opportunity for some consumers to buy their first mobile PC.
The PC market in Latin America grew 19.6 percent in the third quarter of 2011. Mobile PC shipments grew 31.1 percent year over year, and desk-based PC shipments increased 6.5 percent in the third quarter of 2011.

PC shipments in Japan grew 3 percent, with shipments reaching 3.9 million units. The consumer market received a boost in demand with the introduction by vendors of new consumer models in September. There was also a rebound in production for the professional market, after a drop in enterprise demand because of the higher prioritization for business continuity plans that coincided with the earthquake and tsunami in March.

These results are preliminary. Final statistics will be available soon to clients of Gartner's PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe. Additional research can be found on the Computing Hardware section on Gartner's website at .

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Worldwide PC Market Grapples with Slow Growth in Second Quarter as Lenovo Rises to Number 2 Position, According to IDC

12 Oct 2011

FRAMINGHAM, Mass., October 12, 2011 – Worldwide PC shipments increased by 3.6% in the third quarter of 2011 (3Q11) compared to the same quarter in 2010, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. The results are up slightly from the 2.7% growth experienced in 2Q11, and just below IDC's August projections for 4.5% growth in the quarter. The Americas and EMEA were slightly below expectations while the Asia/Pacific markets were slightly ahead. The market continues to struggle as consumer discretionary income is diverted to other areas and business spending remains depressed in light of other priorities and a potential double-dip recession.

"For the moment, PCs have taken a backseat to a range of other devices competing for shrinking consumer and business budgets," said Jay Chou, senior research analyst with IDC's Worldwide Quarterly PC Tracker. "While growth is expected to stay in mid-single digits in the fourth quarter, we should see faster growth in 2012 and beyond based on easier comparisons and refreshed PC offerings as the industry better addresses the evolving usage models by integrating more of the features in ultra mobile devices."

"Most vendors continue to struggle with the slow market environment and product changes," said Loren Loverde, IDC vice president of Worldwide Consumer Device Trackers. "Although we don't see media tablets and other devices replacing PCs, questions on how products will evolve, and consumer interest in these and other categories are providing a distraction. And while price remains critical, many users are delaying PC purchases for the moment. Still, there are opportunities, as demonstrated by Lenovo's gains, and we expect PCs to find stronger demand in the coming years."

"The U.S. market came in about flat as expected, but failed to generate positive momentum given the state of saturation and lack of incentives for consumers to upgrade. Other inhibitors included the poor economic environment and, to a certain extent, iPad cannibalization," said David Daoud, IDC's Personal Computing Research Director. "As we approach the holiday season, the opportunity for low single-digit growth is real, but mostly as a result of poor market conditions last year, as opposed to a recovery in demand."

Regional Outlook

The United States market came in roughly flat with year ago shipments as the consumer and commercial demand remained constrained. Nevertheless, the market moved out of negative growth and HP registered strong growth going into the holiday season.

Europe, Middle East, Africa (EMEA) performed in line with forecast as the PC market continued to shrink in the third quarter across both desktop and portable form factors. The back-to-school season saw sustained weakness in consumer demand, with spending being diverted to media tablets and smartphones, while vendors and channel players remained focused on clearing consumer notebook inventory before taking new stock. Besides weak consumer trends, commercial demand has also slowed down, indicative of the increasing caution and postponed investments as a response to the current economic and financial turmoil in the Euro-zone and the U.S.

Japan continued to see growth in low single-digits. Lenovo finalized its merger with NEC, leveraging its scale and becoming the clear market leader. Although power rationing affected some commercial purchases, the market by and large continued to see more adoption of both consumer and business PCs.

Asia/Pacific excluding Japan (APeJ) had a strong quarter with double-digit growth, meeting expected volume. The region managed to regain momentum, reversing two previous quarters of only single digit growth due to gains in China and India, as well as good volume in Indonesia and Thailand.
Vendor Outlook

HP grew 5.3% year on year, thanks to double-digit growth in the U.S. The company has been criticized for management missteps in the past few months, and been affected by slower consumer demand in many regions, but managed to outpace overall market growth nonetheless.

Dell continued to make gains in APeJ and CEMA, but declines in more mature regions pulled overall growth to –1.6% year on year. Dell faced tough competition and had sizable declines in some markets. However, its continued expansion efforts in China continued to pay dividends, maintaining double-digit growth in Asia/Pacific (excluding Japan).

Lenovo experienced strong gains across all regions as it continues its channel expansion and capitalizes on disarray among the other top players. Lenovo has now outpaced the market by more than 10% for the past 9 quarters, and by 20% or more in six of these periods. The results moved Lenovo ahead of Dell in 3Q11 after trailing by a small margin in the second quarter. Lenovo's partnership with NEC and the acquisition of Medion added incremental volume and provided new access to the Japanese and Western European markets.

Acer continued to struggle with inventory clearing and adjusting its strategy following declines in mini notebooks and its management shake-up. Total shipments were down 20.6% from a year ago – the fourth consecutive quarterly decline – but easier comparisons may help the company turn a corner in coming quarters.

ASUS had a strong quarter, boosting growth to over 30%. Strong gains in Asia/Pacific, along with improvements in EMEA, helped ASUS overtake Toshiba for the number 5 spot in worldwide shipments. While the vendor has had some difficulties adjusting for the decline in mini notebook PCs, its mainstream notebooks have done well, especially in emerging markets.

Apple Total shipments increased more than 20% in 3Q11, recovering from a dip to 15% growth in the second quarter but otherwise continuing a trend of more than 2 years with over 20% growth. The MacBook Air continues to boost volumes, and Apple's position in driving changes in consumer expectations for devices also positions it favorably relative to other players and tight consumer spending.

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 do not include handhelds, x86 Servers and Media Tablets (i.e. iPad and Android-based Tablets). Data for all vendors are reported for calendar periods.