PC shipments going south

Blame it on tablets and smartphones and shrinking market in China- the PC industry is in for tougher times ahead. Going by the monthly PC tracking in the world's top PC markets from IDC for February reveals slower than expected growth in China during the first quarter of 2013 (1Q13). The report says, "Although the slowdown is partially due to the timing of Chinese New Year and other expected factors, new budget cuts from the government as well as anti-corruption measures are slowing purchases more than expected. March should recover somewhat in China, but not enough to offset the weak February results."

China is the biggest PC consumer taking a lion's share of about 21% of the global shipments in 2012. With the weak February 2013 sales in China, IDC predicts it would upset the overall Q1 13 numbers The IDC report says, " The slow February results and likely impact on March are expected to lower first quarter global PC shipments by roughly 2% from recent forecasts. Other monthly results indicate close-to-forecast market performance in Europe, Middle East and Africa (EMEA), Latin America, and Asia/Pacfic (excluding Japan)(APeJ) while supply chain data indicate room for a slightly larger downward adjustment."

Says Loren Loverde, Program Vice President, Worldwide PC Trackers at IDC, "Based on our latest quarterly figures, global PC shipments were expected to decline by 7.7% in the first quarter as vendors and the supply chain work through the Windows 8 transition. However, our February monthly data suggest that we could see a drop touching double-digits in the first quarter and a mid-single-digit decline in the second quarter before we see any recovery in the second half of the year. Even getting to positive growth in the second half of 2013 will take some attractive new PC designs and more competitive pricing relative to tablets and other products."

Worrying trend

The sluggishness in the PC market and the mute Q1 13, is indeed a big source of concern of the major PC vendors. The irony is the leading PC vendors is losing out dominantly to Mobile products companies like Apple and Samsung. Over the last quarter, the vendors like HP and Lenovo clearly tried to re-invent the desktop portfolio with a renewed focus on AIOs and Windows based tablets and hybrid Ultrabooks which can double as a tablet as well as a notebook. But, traditional PC vendors were unable to push the innovation envelope beyond a certain limit. For instance if we look at vendors like HP, Dell, Acer, Asus and Lenovo- their smartphone and tablet strategies had miserable failed and the various devices these vendors have launched in the last two years on this space had failed to garner any big volumes.

In this backdrop, Q2 of CY 13, makes for an extremely competitive market dynamics and with Dell in transition and its private foray caught in shareholders lack of consensus makes the coming quarter one of the most challenging for the traditional PC vendors in the fray.