IDC, Gartner: Sluggish Consumer Demand Causes Q1 Global PC Sales Decline

Research firms IDC and Gartner issued similar reports on Thursday showing a decline in global PC sales during the first quarter due primarily to macroeconomic reasons, including weak consumer demand -- although both noted areas of growth as well.

IDC said Q1 global PC shipments declined 3.2 percent year-over-year -- the first decrease in overall PC sales since the end of the global economic recession. According to IDC, the recent earthquake in Japan combined with rising fuel and commodity prices to slow down growth in the market.

Furthermore, IDC predicted that the PC market is headed for a frugal phase as short-term factors such as events in Japan and the Middle East cause a ripple effect throughout the global economy. However, according to Jay Chou, senior research analyst with IDC's Worldwide Quarterly PC Tracker, macroeconomic forces will eventually give way to vendors’ ability to offer a user experience worth the price of increasingly powerful personal systems.

"Long-term success will depend on hardware manufacturers being able to articulate a message that is beyond simple hardware specifications,’ said Chou, in a statement. "'Good-enough computing' has become a firm reality, exemplified first by mini notebooks and now media tablets’

In its global PC sales report issued on Thursday, Gartner said that the global PC market would have experienced one of the worst declines in recent history had it not been for growth in the professional PC sector stemming from the PC refresh cycle, which it expects to continue through 2011 and perhaps into next year.

While Gartner estimated global Q1 PC shipments at 84.3 million units, a 1.1 percent decline year-over-year, the drop-off fell short of the analyst’s previous Q1 forecast of 3 percent growth. Mikako Kitagawa, principal analyst at Gartner, said weak consumer demand was the primary reason for reduced growth. Kitagawa also said competitive pricing on consumer PCs is no longer sufficient in order to sell those PCs.

In addition, Kitagawa said tablets and other consumer electronics have captured the attention of potential PC buyers and cut into PC sales, but did not say whether tablet cannibalization would continue to affect the overall market adversely. ’With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs,’ Kitagawa said. ’We're investigating whether this trend is likely to have a long-term effect on the PC market."

Regarding the risk of tablet cannibalization, IDC’s Bob O'Donnell, program vice president for Clients and Displays, said that the growth of tablets is not wholly responsible for the decline in the PC market and that the industry will continue to struggle in Q2, and will likely only improve in the second half of 2011.

Where Vendors Stand

While several vendors have struggled as a result of this combination of factors, IDC pointed to markets where each company continued to see growth, despite the overall decline.

HP’s sales were down 2.8 percent year-over-year, according to IDC, as it struggled in regions such as Asia/Pacific despite out-performing the market in most regions, including Latin America. Dell, which according to IDC saw disappointing overall sales due to low consumer demand and business volume, still outperformed the market slightly and made gains in emerging markets, especially China.

However, Acer reportedly lost market share in emerging markets, surrendered second place in the U.S. market to Apple, and suffered losses in the mobile space as it prepares its first entry in the tablet segment.

Some vendors reportedly navigated their way through turbulent times by offering competitive mobile PC platforms. IDC said Lenovo ’significantly outperformed’ the global market with a 16.3 percent increase in shipments. The analyst attributed Lenovo’s success to an expansion in its channel business, as well as strong results for its Asia/Pacific business.

Meanwhile, Toshiba grew 3.8 percent in Q1, according to IDC, which cited Toshiba’s strategy of emphasizing mobile PC designs rather than smaller form-factor notebooks as reason for Toshiba’s growth in every region except for Europe, the Middle East, and Africa.

Gartner estimated that HP in Q1 maintained the top spot in the global PC market with about 17.6 percent market share, despite performing below the market average as a result of slow demand and issues in its Asia/Pacific region that Gartner cited without specifying further. Dell meanwhile struggled in the midmarket segment, according to Gartner, where additional players have raised the level of competition. The analyst mentions Acer in particular as a PC vendor that has been negatively impacted by the rise of tablets and said Acer’s shipments were down 12.2 percent year-over-year.

Meanwhile, Gartner said, Apple maintained strong PC sales growth from last year with its Macbook Pro refresh in February.

Gartner said Q1 mobile PC shipments in the U.S. declined for the third consecutive quarter. Gartner estimated U.S. shipments at 16.1 million units, down 6.1 percent year-over-year. Kitawaga said this was both due to tablet cannibalization and microeconomic conditions.

’As with the worldwide market, the U.S. PC market was affected by the hype surrounding media tablets,’ Kitagawa said. "The U.S. professional PC market showed steady growth across all sectors. However, the public sector showed more than the normal seasonal weakness due to budgetary issues."

HP maintained its lead in the domestic market with 26.2 percent market share, although the company’s PC shipments were down 3.5 percent in Q1. Gartner said price competition in the professional segment, and the midmarket in particular, were the primary factors in the decline of HP’s sales.