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Wednesday, February 12, 2014
Mobile PC Market Underperforms in Q4 Despite Growth


Despite the strongest sequential growth in four years, the global market for mobile PCs came in below expectations in the final quarter of 2013, according to a new report from IHS Technology.

Shipments of mobile PCs worldwide in the fourth quarter last year amounted to 52.6 million units, up 9.4 percent from 48.1 million in the third quarter. However, the fourth quarter result was far less than the 55.3 million units that the industry had been hoping for. And if market performance every quarter was measured against the equivalent three-month span from a year earlier, it was the sixth straight year-over-year decline on a quarterly basis for the period, down 5 percent from the fourth quarter of 2012, as shown in the attached figure.

"Things were looking positive for the fourth quarter of 2013 after the third had come in on target. The introduction of new platforms and the arrival of Intel?s new-generation Atom processor Bay Trail were expected to enable a new entry-level pricing point for the PC market not seen since the netbook," said Craig Stice, director for compute, servers and storage at IHS.

"But with the consumer PC market struggling, PC vendors proceeded to maintain a conservative buying plan for the holiday season with attempts to keep inventory levels lean. As a result, entry-level PCs did not make it into high volume for the holidays, and overall shipments underperformed the initial heady outlook," Stice added.

And yet the disappointment was tendered with an upshot of cheer: The 9.4 percent increase in the fourth quarter was the strongest sequential growth since the fourth quarter of 2009. It was also the second straight sequential rise after the 5 percent contraction in the second quarter.

The mobile PC market, which counts laptops and PC tablets, has been laboring for some time now to defy the mighty heft of the wireless market. Wireless PC rivals like smartphones and tablets have been pronounced by consumers to be more agile and appealing, with their PC-like functions made available in an abbreviated form factor.

And while the mobile PC industry has countered with innovations of its own, the industry as a whole has not been able to lure consumers away from the hugely popular handsets and tablets.

Even so, some signs are giving the industry renewed cause for optimism. For instance, PC vendors are expected to continue replenishing their inventory with new machines featuring Bay Trail, which will provide longer battery times and more powerful graphics performance. Sales could also be up around this time as Asia celebrates the Chinese New Year, another encouraging factor.

A third driver could be the scheduled expiration of the Windows XP operating system in April this year. Consumers could then undertake a refresh of their current machines, ditching old laptops in favor of new Windows 8-equipped mobile PCs to go with upgraded hardware.

Finally, mobile PC enthusiasts believe that media tablets like the Apple iPad are reaching saturation levels especially in the developed markets, which could stoke new interest among those wishing to go back to tapping the full power of a PC, even if it's just a mobile version like a laptop.

For these reasons the decline seen in the last two years should start to level off, Stice noted, even though the PC space isn't likely to bounce back to the double-digit growth once seen in years past.

Within the server industry, the move by China?s Lenovo to acquire IBM?s server business will boost Lenovo to the No. 3 spot in servers, just behind Hewlett-Packard and Dell. However, the $2.3 billion purchase comes at a time of increasing uncertainty for servers in general, especially as businesses turn increasingly to customized data centers and cloud storage, IHS believes. This was unlike 2005 when Lenovo bought IBM's PC business when the PC industry was clearly still on the rise. Lenovo?s advantage in the market this time, however, will lie in its ties to China, where HP and Dell have struggled to gain traction in their server operations.

For IBM, the sale will allow the New York-based giant to shed its lowest-profit segment and continue focusing on its enormously lucrative services and software business - to say nothing of adding to the company's ultimate bottom line.




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