Windows PCs See Steepest Decline Ever

• By David Nagel
• 04/16/13

The market for Windows-based PCs has declined faster than anticipated. According to two independent reports, PCs fell off 11.2 percent to 13.9 percent in the first quarter of 2013 — the steepest decline in the history of the PC.

A 'Worrisome' Decline
According to market research firm IDC, worldwide PC shipments fell of 13.9 percent in the first quarter (versus 1Q 2012) to 76.3 million units worldwide, significantly greater than IDC's previous forecast of a decline of 7.7 percent. (Results are based on preliminary data.)

IDC pointed to the launch of Windows 8 as a contributing factor to the hefty decline.

"At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," said Bob O'Donnell, IDC program vice president, clients and displays, in a prepared statement. "While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices. Microsoft will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market."

The decline is "worrisome," according to David Daoud, IDC research director, personal computing.

"Although the reduction in shipments was not a surprise, the magnitude of the contraction is both surprising and worrisome," Daoud said in a statement released to coincide with the report. "The industry is going through a critical crossroads, and strategic choices will have to be made as to how to compete with the proliferation of alternative devices and remain relevant to the consumer. Vendors will have to revisit their organizational structures and go to market strategies, as well as their supply chain, distribution, and product portfolios in the face of shrinking demand and looming consolidation."

Market research firm Gartner reported similar preliminary findings for the first quarter. Gartner said shipments fell 11.2 percent from first quarter 2012 to first quarter 2013 to 79.2 million units worldwide, a record decline as well. Mikako Kitagawa, principal analyst at Gartner, attributed much of the decline to consumer migration to tablets and smart phones and indicated that the professional PC market, by contrast, remains healthy.

"In the first quarter of 2013, it was the fourth consecutive quarter that showed a drop in worldwide PC shipments," Kitagawa said in a prepared statement. "Consumers are migrating content consumption from PCs to other connected devices, such as tablets and smartphones. Even emerging markets, where PC penetration is low, are not expected to be a strong growth area for PC vendors.

"Unlike the consumer PC segment, the professional PC market, which accounts for about half of overall PC shipments, has seen growth, driven by continuing PC refreshes. Despite the fact that some regions already passed the peak of PC refresh, overall professional PC demand continued to grow."

Gains and Losses
Gartner and IDC disagreed on many of the particulars. According to Gartner, of the top-5 manufacturers in the first quarter, only Lenovo saw positive gains worldwide (0.1 percent), while two were int he positive column in the United States (Apple and Lenovo).

By IDC's reckoning, none of the top-5 worldwide vendors saw gains (Lenovo essentially flat with five more units shipped in 1Q 2013), while domestically only Lenovo saw gains.

The most glaring difference was in the two firms' preliminary findings for Apple. According to Gartner, Apple shipped 1.65 million units in 1Q 2013 versus 1.54 million in 1Q 2012, a 7.4 percent gain. Despite the gain, according to Gartner, Apple's market share in the United States fell to the single digits — 9.8 percent in 1Q 2013 versus 11.6 percent in 1Q 2012.

IDC meanwhile showed a loss for Apple in the quarter of 7.5 percent, dropping to about 1.42 million units. IDC put Apple's 1Q 2013 market share at 9.4 percent, down from 10 percent in 1Q 2012.

Both firms places the same manufacturers in the same order in the worldwide and domestic top-5.

The worldwide top-5 manufacturers in the first quarter were:

1. HP: down 23.7 percent to 11.99 million units according to IDC, down 23.6 percent to 11.69 million units according to Gartner;
2. Lenovo: flat at 11.7 million units according to IDC, up 0.1 percent to 11.67 million units according to Gartner;
3. Dell : down 10.9 percent to 9.01 million units according to IDC, down 11.2 percent to 8.73 million units according to Gartner;
4. Acer: down 31.3 percent to 6.15 million units, according to IDC, down 29.3 percent to 6.84 million units according to Gartner;
5. ASUS: down 19.2 percent to 4.63 million units according to IDC, down 3.5 percent to 5.36 million units according to Gartner.

In the United States, the top-5 for the quarter were:

1. HP: down 22.9 to 3.57 million units according to IDC, down 23.3 percent to 3.45 million according to Gartner;
2. Dell: down 14.4 percent to 3.07 million units according to IDC, down 14.5 percent to 2.97 million units;
3. Apple: see above;
4. Toshiba: down 5.2 percent to 1.28 million units, according to IDC, down 5.3 to 1.28 million units according to Gartner;
5. Lenovo: up 13 percent to 1.27 million units according to IDC, up 13.8 percent to 1.27 million units according to Gartner.

"Although the overall economy had some upward momentum, it did not help buoy PC growth, suggesting the economic recovery is having little impact on PC market conditions," IDC's Kitagawa said. "Similar to other mature markets, the U.S. will see the installed base of consumer PCs decrease going forward. This is because many of these systems will not be replaced with PCs; they will be displaced by other devices, or simply retired."

Further information about Gartner's findings can be found in Gartner's Hardware Computing portal. Additional details on IDC's findings can be found in IDC's Worldwide Quarterly PC Tracker.