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Thursday, January 13, 2011
PC Market Records Modest Gains in Q4 2010


The worldwide PC market continued to slow in the fourth quarter of 2010 (4Q10) due to a softening consumer market, competing products like Media Tablets, and strong year ago sales, according to the International Data Corporation (IDC).

Despite a holiday season marked by a long promotion cycle and highly competitive price points, the global PC market saw shipments rise only a modest 2.7% year on year during 4Q10, IDC said. Fourth quarter growth was slightly less than a projected increase of 5.5%, but shipments of 92.1 million for the quarter still were the largest ever. Total shipments for 2010 reached 346.2 million, an increase of 13.6% that was fueled by a strong recovery in the first half of the year.

Softening demand in Asia/Pacific (excluding Japan) contributed to the slow market with shipment growth falling into single-digits following a recent peak of more than 30% a year ago. Other regions were generally in line with expectations. The United States market declined 4.8% year on year, while other regions continued to experience market expansion, albeit at a slower pace than in recent quarters.

"The US market was expected to shrink year over year given the exploding growth experienced in the fourth quarter of 2009. Growth steadily slowed throughout 2010 as weakening demand and competition from the Apple iPad constrained PC shipments. In addition to relatively high market penetration and a 'good-enough' computing experience with existing PCs, consumers are being more cautious with their purchases and competing devices have been vying for consumer dollars. This situation is likely to persist in 2011, if not worsen, as a wave of Media Tablets could put a dent in the traditional PC market," said David Daoud, research director, US Quarterly PC Tracker and Personal Computing.

"Consumer fatigue is playing an important role in many markets as the Mini Notebook surge wanes and consumers watch their spending and evaluate other products," said Jay Chou, research analyst, Worldwide Quarterly PC Tracker. "Softening demand in Asia/Pacific and the potential for similar changes in other regions represent the biggest potential shift in PC growth during 2011. These factors are likely to slightly reduce growth from previous projections of about 10% for 2011, although replacements in the commercial segment and aggressive competition should still support double-digit growth in the second half of the year."

Regional Outlook

* United States - Despite a difficult year-on-year comparison, the fourth quarter still managed to produce the highest volume quarter of the year. We continue to expect roughly flat growth in the first half of 2011 before the market picks up speed again.

* Europe, Middle East, Africa (EMEA) - As expected, EMEA recorded a soft Christmas quarter as the region remained constrained by high inventory levels particularly in the retail channel. Consumer demand continued to be adversely impacted by the stellar uptake of media tablets, diverting consumers' budget away from computing. Recovery in the commercial segment continued gradually, however the sustained economic uncertainty and a string of new austerity measures put pressure on IT investments.

* Japan - Enterprise renewals continued to be a driver as strong commercial purchases of XP systems helped offset a small decline in consumer demand.

* Asia/Pacific (excluding Japan) - Shipments increased only 7% in 4Q10, the first single digit growth quarter since 1Q09. This was in part due to the comparison to a strong 4Q09 base, but also because of continued notebook channel inventory challenges this quarter.

Vendor Outlook

* HP - faced a challenging quarter in the U.S. as sales of Mini Notebook PCs and consumer purchases slowed, contributing to a year-over-year decline of 5.3%. However, HP managed to stake out growth in other regions and saw a global decline of roughly 1%.

* Dell - Solid numbers in emerging markets helped it to grow slightly above market at 4.2% and regain the number 2 position in total PC shipments. Still, Dell's shipments declined slightly compared to 3Q10, in part due to the stalled U.S. market.

* Acer - After a strong run through 2009, the vendor was affected by lackluster sales of Mini Notebook PCs and slowing consumer demand across many markets.

* Lenovo - Generally grew well above market at just over 21% growth worldwide. Its improvement in garnering commercial projects and disciplined approach to region-specific initiatives helped it to continue to grow in a finicky market.

* Toshiba - Shipped 12.1% more units than the same quarter last year, as one of the few top vendors managing double-digit growth in the U.S. and worldwide.


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