Monday, July 11, 2016

2Q 2016: WorldWide PC market share: Lenovo 21.2%, HP Inc 20.8%, Dell 16%. USA market: HP Inc 27.9%, Dell 25.8%





Worldwide PC shipments totaled 62.4 million units in the second quarter of 2016 (2Q16), a year-on-year decline of 4.5%, beating the forecast of -7.4% by roughly 3%, according to the International Data Corporation (IDCWorldwide Quarterly PC Tracker. The United States market performed best, reflecting the strength of the U.S. dollar and relative market stability.

Improvement in channel inventories appears to have contributed to the stronger results, along with an easier year-on-year comparison and easing of component supply. Unfortunately, these types of supply-side drivers don't necessarily reflect a change in consumer purchases. Even PC channels remain fairly cautious following challenges over the past year, so the results are not likely to raise the forecast.

Nevertheless, improved inventory levels put the market on a better footing for the second half of the year, and the expiration of free Windows 10 upgrades may transition some users into buying new systems rather than updating older ones. Commercial evaluations of Windows 10 remain healthy and a near-term driver that could also be contributing to the relative strength in U.S. shipments.

"The PC market continues to struggle as we wait for replacements to accelerate, along with some return of spending from phones, tablets, and other IT," said Loren Loverde, vice president, Worldwide PC Trackers & Forecasting. "Our long-term outlook remains cautions. However, the strong results in the U.S. offer a glimpse of what the market could look like with pockets of growth and a stronger overall environment. It's not dramatic growth, but it could push the market into positive territory slightly ahead of our forecast for 2018."

"As expected, the start of the peak education buying season helped generate large Chromebook shipment volumes in the U.S.," stated Linn Huang, research director, Devices & Displays. "A somewhat unexpected boost came from intensified inventory pull-in as cautious channel players, who had been working to pare down inventory over the last several quarters, opened up inventory constraints a bit. This was likely a one-time shipment boost to bring aggregate inventory levels back to market equilibrium. The larger story remains whether an early wave of enterprise transition to Windows 10 could help close out a 2016 that is increasingly looking stronger in the U.S."

In Europe, market sentiment remained muted. "Even the best case scenario calls for PCs to face significant challenges, with a somewhat fragile stabilization in the long run. The preliminary results did not capture the potential repercussions from the Brexit vote, which is expected to affect the timing and scope of spending plans in Europe," said Jay Chou, research manager, IDC Worldwide PC Tracker, "IDC continues to monitor the evolving situation closely. The better than expected 2Q16 results should not be interpreted as a harbinger of significant improvements for PCs."

Regional Highlights
United States – The U.S. market saw a healthy jump in growth in the second quarter of 2016. HP Inc. and Dell continued to vie for leadership of the U.S. market, with HP Inc. recovering the title in 2Q16. 

Lenovo and Acer also saw strong growth, actually outpacing the market leaders but with much smaller share. Despite uncertainty in various parts of the market, the competitive environment, strength of the U.S. compared to other markets, strong gains in Chrome shipments, and a relatively easy comparison to year-ago shipments contributed to year-on-year growth of almost 5%.

Europe, Middle East, and Africa (EMEA) – In the EMEA region results are expected to be in line with forecast. Mobility needs continued to push interest towards notebooks, which supported overall volumes. 

This is the first recent quarter of comparison that was not impacted by Bing promotions (that inflated shipments through Q1 2015). As a result, 2Q16 shipments represent a more normalized growth trend – still confirming long-term market erosion for traditional PCs, but showing hints of short-term stabilization. Currency fluctuations in the EMEA region, localized political developments in Western Europe, and ongoing instabilities in the Middle East are also constraining shipment growth.

Asia/Pacific (excluding Japan) – The APeJ PC market witnessed a decline in line with expectations. Weakness in consumer demand continued in most countries across the region: Ramadhan observance affected consumer spending, while high inventory inhibited new shipments. Also, a number of commercial projects in India, Thailand, and the Philippines have been postponed until the next quarter.

Japan – The market performed better than forecast and posted solid year-on-year growth. However, a slowing economic outlook, weaker Yen, and sluggish consumer spending further dampened demand.

Vendor Highlights
Lenovo remained the worldwide PC market leader, and continued its strong growth in the U.S. market. However, shipments in other markets continued to decline, pulling down overall growth. Lenovo's lead in the share of total PC shipments shrunk over the past year from 1.8% a year ago to 0.4% this quarter. Nevertheless, the margin of leadership has fluctuated since Lenovo took the lead in 2013. Q2 2015 marked the largest lead Lenovo has ever held, and the company boosted its overall share to a peak of 21.7% in Q4 2015.

HP Inc. had a solid quarter, with growth returning to positive territory after a year of declines. The U.S. led regional growth with a gain of 11.5% from last year as the company rebounded from a couple of soft quarters, but other regions also saw growth in positive territory.

Dell also had a productive quarter, with worldwide growth recovering to over 4%. Dell managed a strong recovery in Japan, while also driving solid growth in the United States, although EMEA continued to drag on overall results.

ASUS also saw growth recover in 2Q16, benefitting from an easier year-on-year comparison. The vendor pulled just ahead of Apple for the number 4 spot in overall PC shipments.

Apple continues to face an increasingly competitive market as it awaits a refresh of its PC lineup. As a result, shipments experienced a decline from last year.

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, Ultraslim Notebooks, Chromebooks, and Workstations and do not include handhelds, x86 Servers and Tablets (i.e. iPad, or Tablets with detachable keyboards running either Chrome, Windows or Android). Data for all vendors are reported for calendar periods.

IDC's Worldwide Quarterly PC T racker gathers PC market data in over 80 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

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