PC market performs better than expected despite decline — IDC

KUALA LUMPUR: Preliminary results for the fourth quarter of 2018 (4Q18) showed shipments of traditional PCs (desktop, notebook, and workstation) totaled just over 68.1 million units, marking a decline of 3.7 per cent in year-on-year terms, according to the International DataCorporation(IDC)Worldwide Quarterly Personal Computing Device Tracker.

However, in a press statement, it pointed out that the results slightly outperformed the forecast, which called for a decline of 4.7 per cent, but also produced the largest year-on-year decline since the third quarter of 2016 (3Q16) and capped the full year at a nearly flat rate of 0.4 per cent.

Heading into the quarter, it noted that there was industrywide concern over processor shortages and rising economic tensions between the US and China. Aggressive stocking of inventory during the previous quarter (3Q18) in anticipation of the shortage led to some sellthrough challenges, driving a reduction of 4Q shipments in some regions.

It pointed out that 4Q is typically oriented toward consumer promotions that help drive the industry’s biggest quarter of the year, but the confluence of events in 2018 led to the lowest sequential growth for a holiday quarter since the fourth quarter of 2012.

Nonetheless, the market performed better than expected, with corporate PC refresh – driven by the looming Windows 7 end of life (EOL) in January 2020 – helping to offset consumer market challenges.

Japan had an especially strong quarter driven by commercial refresh, which lifted virtually all aspects of the market. All regions except the US exceeded the forecast, although Asia/ Pacific (excluding Japan) faced challengesfromadifficultChinese commercial environment.

“The ongoing economic tensions between China and the US continue to create a lot of uncertainty in the business environment in China. As demand for Chinese products in the US drops, this particularly impacts businesses of all sizes from the manufacturing sector in China, which, in turn, translates to a drop in IT purchases by these companies,” said Maciek Gornicki, research manager with IDC’s Asia/Pacific Client Devices Group.

“As a result, the PC market in China is expected to suffer bigger declines throughout the year. And if the trade war escalates further, we should expect spillover of the impact to other countries, particularly due to the expected fluctuations of the exchange rates impacting businesses across the region.”

IDC’s Devices and Displays Group senior research analyst Neha Mahajan commented: “As the US PC market, especially the lower-end, continued to suffer from the ongoing shortfall of Intel CPUs, overall PC sales took a hit during the fourth quarter of 2018.”

Neha added: “While the processor supply challenges are expected to continue into the first two quarters of 2019, PC makers are likely to see the situation improve before the back-to-school season begins during the latter half of the year.”

The traditional PC market inAsia Pacific, excluding Japan, posted a single-digit decline in 4Q18, which was relatively close to IDC’s forecast.

“Overstock in the channels, coupled with Intel CPU shortages, impacted sell-in across the region. In India, a significant drop in consumer demand together with high inventory remaining in the channels led to a stronger than expected decline in the consumer and SMB segments, while Intel supply shortages led to a drop in sales to the enterprise customers.