Consumer spending stabilises: Lessens PC slump

FRAMINGHAM, USA: As in the first quarter of 2009, global PC shipments again came in slightly ahead of expectations in the second quarter (2Q09), lessening fears over the extent of the PC market slump.

Worldwide PC shipments (including desktop and portable PCs, but excluding x86 servers) were down 3.1 percent from the second quarter of 2008 – a notable improvement over an expected decline of 6.3 percent, according to IDC’s Worldwide Quarterly PC Tracker.

All regions either met or surpassed expectations. Although the global downturn is still making its effects felt in the PC industry, the slump has been mitigated by a PC market, which has seen the computing experience evolve to be more personal, portable, and cost-oriented rather than performance-driven. Portable PCs continue to be the primary driver of volume and growth with all regions seeing strong portable shipments.

Loren Loverde, program director, IDC's Tracker Program, says: "These results are a very positive indicator for the second half of the year. We are seeing continued demand from consumers and limited impact from supply chain factors such as inventory balancing."

"New product launches in the second half of the year combined with seasonal growth and greater economic confidence resulting from factors such as government stimulus, a more liquid housing market, relatively stable stock market and interest rates, and progress in the auto and financial industries, should support the expected return to growth by year-end."

While the market has outperformed expectations for a second consecutive quarter, the lack of commercial activity remains a drag on growth. The commercial segment remains more conservative with spending, focusing on other priorities and preserving cash. As a result, the segment has not been as motivated by falling prices and new portable designs as the consumer segment.

Bob O’Donnell, vice president, Clients and Displays, says: "Despite continued contraction from a year ago, the US market managed a better-than-average sequential performance – an indication of a stabilizing or improving market. While the sequential growth may be a hint of recovery, the market's focus on lower-price PCs and mini notebooks is likely to drag the value of the market to lower levels."

"The market continues to rely on consumer purchases, with a substantial weakness in the commercial space. We expect to see more of the same as we enter the busy shopping season of the second half of the year. In the longer term, an expected recovery in the commercial segment should boost growth in 2011."

Regional Outlook

United States – The US PC market declined by 3% year over year in the second quarter, matching forecasts for the market. Ongoing healthy volume through Retail spurred Portables to exceed forecasts, but that was offset by Commercial sluggishness and Desktop volume below expectations. Dell regained its lead by a small margin, but remains hampered by slow commercial spending.

Europe, Middle East, and Africa (EMEA) – In line with IDC's forecast, the EMEA PC market continued to contract for the second consecutive quarter. The Portable PC market performed ahead of expectations, maintaining single-digit positive growth, thanks to continued uptake of mini notebooks in the consumer segment and additional momentum generated by the telco channel. But whilst the consumer market held up well, spending in the commercial segment remained constrained across all form factors.

Japan – Shipments declined slower than expected in the second quarter, with year-over-year growth improving notably from the first quarter. Nevertheless the Japanese market continues to be plagued by tepid Commercial activity and a Consumer market shifting towards lower cost Portables, which has benefited non-Japanese OEMs with a clear focus on Mini Notebook PCs.

Asia/Pacific excluding Japan (APeJ) – PC shipments exceeded forecasts, fueled by very strong Portables growth, particularly in Southeast Asia. China was a bright spot in the region, while India came in close to expectations. Shipment growth returned to positive territory after several quarters of declining volume.

Vendor Highlights

HP made further inroads into Consumer Portables through the Retail channel and continued to gain share overall. The vendor grew 3.6% year over year worldwide with above-market performance in the U.S. The company also performed well in Europe and Asia/Pacific.

Dell – Although still heavily affected by the Commercial slump, Dell saw good growth from consumer-focused SKUs and reclaimed the number 1 spot in the U.S. The company continues to restructure operations, develop its Consumer business, and should benefit from an eventual rebound in the Commercial segment.

Acer continues to capitalize on its growing channel presence to ship Portables geared toward a wide range of cost-conscious consumers. The company maintained its lead in Mini Notebook PCs while its early entry into Atom-based Notebooks should also pay dividends later in the year. The company saw a significant gain in the US market, likely benefiting from the troubles of Dell and Lenovo.

Lenovo's renewed focus on Notebooks and emerging regions produced positive growth following declines in the past two quarters. Solid growth was reported in Latin America and APeJ while yearly declines in mature regions slowed compared to 1Q09. Its home court advantage in APeJ also has led it to focus on a myriad of government stimulus programs, which could pay dividends while riding through the Commercial downturn.

Toshiba had a solid second quarter where it outgrew the market in most regions and moved up to the fourth spot in the U.S. Toshiba's Mini Notebook offering has helped it to weather the storm comparatively better than other Japanese OEMs and it was the only major Japanese OEM to have positive yearly growth in Japan.

Top 5 Vendors, Worldwide PC Shipments, Second Quarter 2009 (Preliminary)

(Units Shipments are in thousands – excludes x86 Servers)

Source: IDC Worldwide Quarterly PC Tracker, July 15, 2009

Table notes follow the last table

Top 5 Vendors, United States PC Shipments, Second Quarter 2009 (Preliminary)

(Units Shipments are in thousands – excludes x86 Servers)

Source: IDC Worldwide Quarterly PC Tracker, July 15, 2009