Apple, Dell, HP: The PC Malaise – What’s Underpinning It?

Updated on

PC unit growth has been on a decline over the past two years, with units registering a decline of 4 percent in 2012 and 12 percent in the first half of 2013. Analysts (A.M. (Toni) Sacconaghi, Jr., Eric C. Garfunkel and Jonathan Cofsky) at Bernstein research are hoping for some stabilization in the second half of the current fiscal, but expect units to decline by 7 percent year over year for 2013, which, if hit, will be the weakest performance in history.

Apple, Dell, HP: The PC Malaise - What's Underpinning It?

Haswell and Windows 8.1 may revive PC sales

From 1999 to 2011, PC market unit growth declined for only one year and surged as much as 6 percent during the financial slowdown in 2009. In 2012, the situation was grim, with unit growth declining 4 percent. Analysts are expecting a 7 percent downslide in CY13, which is at the high end of the unit growth of -7 percent to -11 percent implied by normal seasonality.

Analysts of Bernstein research believe that PC sales can get some revival by the launch of new products like Haswell and Windows 8.1.

PC replacement cycle has increased

Further, according to the analysts, sales are declining due to push-out in the PC replacement cycle, whereby consumers, instead of recycling their PC, are spending on tablets and phones. Though users have not totally abandoned PCs, they have limited use for performing actions like productivity, photo management, peripherals management, etc. On the corporate front, the companies are facing downside in earnings and so the PC cycles have been further delayed, and there has been limited needs for incremental processing power.

The replacement cycle should come to a balance at some point because PCs have various parts like batteries HDDs and other mechanical connections, which need to be replaced after a few years and eventually will call for new PC purchases.

Converged devices a threat

Further, analysts note that PCs will see a growth in demand again if consumers run short of such devices that fulfill all features of a PC. The trend was previously seen in smartphones, which resulted in the retirement of stand-alone music players, navigation devices, digital cameras, and more.

Converged devices, which are a combination of tablets and PCs, pose some sort of threat to both standalone PCs and tablets in the future, affecting both categories. PC OEM revenues will largely be affected by any offering from Apple Inc. (NASDAQ:AAPL) or Samsung in the converged category, and PC OEM will not be able to stand the competition, the analysts believe.

Leave a Comment