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Thursday, July 15, 2010
PC Rebound Continues With Growth Over 22% Despite Mixed Economic Outlook, According to IDC

Despite worries over sovereign debt and the pace of economic recovery, the global PC market grew 22.4% in the second quarter of 2010 (2Q10), in-line with forecasted growth of 22.9%, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker.

The market in EMEA remained remarkably strong - benefiting from some recovery as well as commercial replacements - while growth in the United States and Asia/Pacific was slightly behind projections, the research firm said.

On a worldwide basis, Desktop PC shipments exceeded expectations, helping to confirm signs that businesses are moving ahead with replacements, while Portable PC sales trailed forecast estimates, reflecting the effects of a thus-far jobless recovery on consumer spending.

"The PC market remains robust, and in a recovery phase, despite challenges to a broader economic recovery, such as slow job growth and a more conservative outlook in Europe and Asia/Pacific," said Jay Chou, research analyst with IDC's Worldwide Quarterly PC Tracker. "The factors which led to the recent PC rebound - an aging commercial installed base, a proliferation of low-cost media-centric PCs, and low PC penetration through much of the world - remain key drivers going forward."

"The surge in consumer activity seen in the past two quarters has started to slow as expected, while commercial replacements continue to grow," said Bob O'Donnell, IDC Vice President for Clients and Displays. "We expect consumer activity to remain healthy, but gradually slow through the end of the year, while commercial market growth will be more stable, reflecting a planned replacement cycle over the next several years."

Regional Outlook

United States - On the positive side, the market saw a slight up-tick in sequential growth as well as a double-digit jump of 12.6% from the previous year, confirming that the market continued to recover. However, projections for a stronger rebound, near 18% growth, to build on a 19% increase in Q1 and more than 25% gain in Q4, did not materialize. A wait-and-see stance dominated the business sector as a result of economic uncertainty. Although we saw some healthy PC refresh activity, volumes were below our initial estimations as buyers reassessed their spending priorities. As we move into the second half of 2010, slower economic growth and rising costs may undermine the market's ability to drive growth with aggressive pricing.

Europe, Middle East and Africa (EMEA) - Despite rising concerns regarding unfavorable exchange rates and escalating public debt across a number of countries, the EMEA PC market met expectations in the second quarter of the year, thanks to healthy demand across both consumer and commercial segments. Mature markets enjoyed sustained renewals, while emerging markets benefited from recovery and a more favorable year-on-year comparison versus substantial market contraction one year ago.

Japan - The Japan market continued to expand by double-digits in the second quarter, but did not approach the more than 25% growth seen in the first quarter. Both Desktop and Portable PCs contributed.

Asia/Pacific (excluding Japan) - The region gained nearly 35% compared to a year ago and also had 15% sequential growth, coming in just short of forecasts. Desktop PC volume moved at a brisk pace to help offset lower than expected activity in Portable PCs. Nonetheless, Portable PCs remained a key driver with at least double-digit year-on-year growth in nearly all countries.

Vendor Outlook

HP outperformed the market in the US (14.2%) but growth in international markets slowed to 11% - trailing the company?s performance in the second half of 2009 and a more significant drop from a robust performance in 1Q10.

Dell had a solid quarter with growth of 19.1%, recapturing second place in total PC shipments. The company benefited from improving business demand along with strong growth in Asia/Pacific and Latin America - as well as rebounding from falling shipments a year ago.

Acer Group grew slightly slower than the market ? primarily a result of strong year-ago performance. This was most evident in the United States and Japan - which saw the slowest growth, while Acer continued to make rapid gains in emerging markets.

Lenovo had a strong quarter with over 47% growth and impressive gains in all regions, especially EMEA and emerging markets. The company continued to capitalize on its strength in Asia/Pacific (excluding Japan), but also maintained rapid gains in North America and Europe. Strong Portable PC growth was a major driver, but Desktop deals into emerging markets and business renewals also played a part.

Toshiba saw shipments increase more than 26% for the quarter as its notebooks continued to find good reception in the Asia Pacific (excl. Japan) region. The company also saw solid growth in the US and EMEA as well.

ASUS continued to make aggressive gains across regions - with global shipments up over 80% from a year ago. Although growth did not match the first-quarter pace, the company continued to expand its distribution network and essentially matched Toshiba for fifth place in total PC shipments.

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