PC Shipment Declines 9.5% in Q2: Worst Decline in 2 Years

The declining PC industry is old news, but the recent data provided by Gartner Inc. IT on second-quarter 2015 PC shipments is surprising as it shows the steepest decline in the past two years. The recent report did not paint a pretty picture of the industry’s future either.

According to the preliminary data released by Gartner, PC shipments in the second quarter fell 9.5% year over year to 68.4 million units, marking the worst slump since third-quarter 2013. The research firm highlighted three main reasons – strong dollar, phase out of Windows XP refresh or upgrade cycle, and launch of Windows 10 – behind the decline.

The appreciation of U.S. dollar against other currencies is the strongest reason for the decline in the PC market. Although PC sales have declined in every region, Gartner’s Jul 7 report stated that PC purchases in Western Europe, Russia and Japan have declined most due to local currency devaluation against the U.S. dollar. The stronger dollar has resulted in sharp price appreciation in various markets which is again affecting PC demand.

Secondly, per Gartner, last year desk-based PC sales witnessed positive growth, mainly due to increased spending in mature markets as a result of system refreshes and enterprise system migrations beyond Microsoft’s MSFT XP operating system. However, as the Windows XP refresh or upgrade cycle phased out, PC purchases witnessed a slump from the beginning of 2015.

Thirdly, according to Gartner the demand for PCs has remained sluggish so far this year due to the upcoming launch of Windows 10. This is because enterprises will prefer to first test the long-lasting operating systems before deploying them at full scale.

Furthermore, Gartner predicts that the aforementioned factors will continue to affect PC shipments in the rest of 2015. Therefore, according to the research firm, PC shipments will fall 4.4% in 2015.

Nonetheless, Gartner hinted that the PC industry may see slow and steady growth in 2016 as the abovementioned factors are only temporary.

This is worth mentioning that the decline has significantly affected PC manufacturers. As per the recent data compiled by Gartner, Lenovo, Hewlett-Packard HPQ, Dell, Asus and Acer registered year-over-year declines in PC sales.

As far as worldwide market share is concerned, Lenovo retained its leading position with 19.7%, followed by Hewlett-Packard, Dell, Asus and Acer with 17.4%, 14%, 6.8% and 6.7%, respectively. However, in the U.S., Hewlett-Packard leads the race with 26.2% market share. Dell, Lenovo, Apple Inc. AAPL and Asus have a market share of 25.6%, 13.3%, 12.7% and 5.1%, respectively.

The declining PC industry has affected part suppliers and allied industries as well which mostly depend of PC sales for revenue generation. Over the past few quarters, Intel Corp.’s INTC sales have been negatively impacted by the declining trend in PC sales as it is a largest supplier of microprocessor to PC manufacturers.

Also, companies operating in the allied industries, such as IT security service provider Symantec Corp. SYMC, are bearing the brunt as they cater to individual PC owners. Moreover, hard-disk drive manufacturers such as Seagate STX and Western Digital WDC are suffering volume declines due to lackluster PC sales.

Apple has a Zacks Rank #2 (Buy), while Gartner, Microsoft, Hewlett-Packard, Intel, Symantec and Western Digital carry a Zacks Rank #3 (Hold). Seagate has a Zacks Rank #5 (Strong Sell).

(SOURCE: tonernews.com)

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