Q3 2012: PC Market: Lenovo Nearly Catches HP for the Worldwide Market Leadership Position.

WorldWide Tech & Science. Francisco De Jesùs.

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Table Notes:

• Some IDC estimates prior to financial earnings reports.
• Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.
• PCs include Desktops, Portables, Mini Notebooks, x86-based Workstations and exclude handhelds, x86 Servers, and Tablets (i.e. iPad and Android-based Tablets as well as Microsoft Windows-based slate Tablets ). Data for all vendors are reported for calendar periods.

IDC's Worldwide Quarterly PC Tracker gathers PC market data in over 80 countries by vendor, form factor, brand, processor, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data. 

Q3 2012: PC Market: Lenovo Nearly Catches HP for the Worldwide Market Leadership Position.

Worldwide shipments of PCs fell sharply in the third quarter, as some consumers spent their electronics dollars on smartphones and tablets and others held off for a new version of Windows.

One research firm also estimated Wednesday that Chinese PC maker Lenovo Group Ltd. outsold Hewlett-Packard Co. for the first time to become the world's largest seller of PCs.

Gartner said global PC shipments fell 8.3 percent to 87.5 million, while IDC said the decline was 8.6 percent to 87.8 million. Their reports came hours after a third research firm, IHS iSuppli, projected that PC shipments are bound for their first annual decline in 11 years.

PC makers began the year with hope that a new wave of lightweight laptops called ultrabooks would provide a sales lift. But ultrabooks haven't been compelling enough to overcome the growing popularity of smartphones and tablet computers. Those mobile devices are reducing the need for consumers and businesses to buy new PCs or replace older ones.

Gartner and IDC agreed that Lenovo was the only one of the top four PC makers that saw an increase in shipments, thanks to low prices. Lenovo vaulted onto the international scene when it bought IBM Corp.'s PC division in 2005. It's been the No. 2 PC maker in the world for a few years, behind Hewlett-Packard Co.

According to Gartner, Lenovo saw worldwide shipments grow 9.8 percent to 13.8 million in the third quarter, giving it a market share of 15.7 percent. HP's shipments fell 16 percent from last year to 13.6 million, for a share of 15.5 percent.

IDC had HP on top with 13.9 million and a share of 15.9 percent, with Lenovo close behind at 13.8 million, or 15.7 percent.

HP, which has its headquarters in Palo Alto, Calif., issued a statement saying that some reports "don't measure the market in its entirety. The IDC analysis includes the very important workstation segment and therefore is more comprehensive. In that IDC report, HP occupies the No. 1 position in PCs."

Both reports are based on estimates. Companies will start releasing their numbers over the next few weeks as part of quarterly earnings reports.

Dell Inc. of Round Rock, Texas, and Acer Group of Taiwan are No. 3 and 4 in both reports. AsusTek Computer Inc., also of Taiwan, is fifth.

In the U.S., both had HP as the top PC maker, followed by Dell, Apple Inc., Lenovo and Acer.

As the year winds down, the PC industry is now counting on an upcoming makeover of the Windows operating system to revive interest in desktop and laptop machines.

Windows 8 has been redesigned by Microsoft Corp. so it can power hybrid PCs that can be controlled by touching a display screen or relying on a keyboard and computer mouse. The revamped operating system also works on tablet computers, including one that is being made by Microsoft. If tablets running on Windows catch on, they threaten to siphon even more sales from PCs.

Machines running on Windows 8 are scheduled to go on sale Oct. 26 from Lenovo, HP, Dell, Samsung Electronics Co. and others.

Even with Windows 8, IHS predicts a 1 percent decrease in PC shipments this year to nearly 349 million. Although small, the anticipated decline would be the first time annual PC sales haven't grown since 2001.

Press Release by IDC:

PC Market Struggles Ahead Of Windows 8 Launch As Lenovo Nearly Catches HP for the Worldwide Market Leadership Position, According to IDC

10 Oct 2012 

FRAMINGHAM, Mass., October 10, 2012 – The worldwide PC market contracted sharply in the third quarter of 2012 (3Q12), with shipments declining 8.6% from the third quarter of 2011, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. The results are below IDC's August forecast of a 3.8% year-on-year market contraction.

IDC had expected a quiet quarter as channels focused on clearing out Windows 7 inventory to make space for Windows 8. Continued pressure from other products such as tablets and smartphones, as well as uncertainty over the impact of Windows 8 and the economic outlook, contributed to depressed shipments – largely as expected. Nevertheless, despite an already conservative outlook, the results show the vulnerability of PCs and the loss of mindshare among buyers who until recent years have flocked to back-to-school promotions in the third quarter for PCs. Familiar and persistent factors such as renewed economic issues and budget diversion into other devices also played a part. As a result, all regions saw shipment volumes decline from a year ago.

"PCs are going through a severe slump," said Jay Chou, senior research analyst, Worldwide PC Tracker. "The industry had already weathered a rough second quarter, and now the third quarter was even worse. A weak global economy as well as questions about PC market saturation and delayed replacement cycles are certainly a factor, but the hard question of what is the 'it' product for PCs remain unanswered. While ultrabook prices have come down a little, there are still some significant challenges that will greet Windows 8 in the coming quarter."

"We expected a weak PC market in the lead up to Windows 8 release in the fourth quarter. While the industry has been focused on shaving excess inventory and preparing to launch a new generation of products, consumers have been looking at alternative devices like tablets. In addition, businesses have slowed their refresh cycle as they remain concerned about the broad economic outlook, amid a busy political season," said David Daoud, research director, Personal Computing at IDC. "Nevertheless, as vendors line up innovative new products and designs, consumers are likely to respond positively during the tail-end of 4Q12, and that means a potential return to positive growth at the end of this year."

Regional Outlook

United States – The U.S. market came in slightly weaker than an already negative forecast, contracting 12.4% compared to a forecast of –9.5%. This reflected weaker consumer demand, including a weak back-to-school season, and an industry-wide inventory clean up. The consumer segment was particularly affected as buyers focused on competing products. Demand in the commercial sector was subdued by weaknesses and uncertainty in the broad global economy amid a heated presidential election season. However, IDC believes that the fundamentals for some recovery exist. With the launch of Windows 8 in 4Q12, we expect shipment growth to return to mid-single digits in the fourth quarter and into next year.

EMEA – The EMEA market remained constrained as expected in the third quarter. July and August saw low sell-in levels as vendors focused on ensuring leaner inventory levels after a strong 2Q12, while September sell-in was boosted, as anticipated, by the production of new Windows 8 systems and an attractive ultrabook and ultra slim line up set to hit the shelves end October. Continued economic pressure in the business space and competition from other devices for consumers, however, combined to keep the supply chain and buyers cautious.

Japan – Japan was one of the stronger markets, benefitting from rebuilding efforts. Unfortunately, this "strength" was only relative to other markets – achieved with shipments still falling short of flat from a year ago.

Asia/Pacific (excluding Japan) – The region continued to contract on a year-on-year basis, though growing sequentially from 2Q12. China was mostly on target but the rest of the region came in below expectations as ongoing economic sluggishness and competing device distractions weighed on PC spending this quarter.

Vendor Highlights

HP saw shipments contract more than 16% from a year ago and narrowly held on to the top vendor spot. Distractions caused by its reorganization, challenges in integrating its enterprise acquisitions, and an unclear strategy to regain its course remain key obstacles.

Lenovo, despite slowing growth in Asia, continued to register the highest yearly growth among all top vendors. The vendor maintained its methodical approach to build out channel partnerships and acquire key OEMs in markets outside it home turf, with varying degrees of success. Its persistence as well as missteps of its rivals helped Lenovo to maintain a top 5 position in the U.S., and gain a couple points of share to nearly tie HP for the lead in global shipments.

Dell faced a tough quarter, dropping below its own 2Q12 shipment volume. The vendor saw share declines in all markets and ended the quarter with a 14% decline. Tepid PC refresh activity in the U.S. and EMEA continued to be a key inhibitor for Dell. Although the company has made strides in other areas, with Asia/Pacific becoming its second biggest market after the U.S., its momentum there has also been curtailed by a cooling market.

Acer Group – the vendor has faced an uphill climb to get back into growth mode since the market for low-priced notebooks dimmed. The third quarter was no different, with shipments registering a sequential decline and disappointing notebook volume. However, Acer's aggressive foray into ultrabooks and Windows tablets could help to reverse its fortunes if Windows 8 finds solid acceptance.