Dell, Lenovo, HP face tough 2013 as IDC predicts 8% drop in PC sales

Infotech Lead Asia: Are computer companies — Dell, Lenovo and HP — facing tough 2013 as IDC predicts 8% drop in PC sales.

IDC on Tuesday said worldwide PC shipments are expected to fall by 7.8 percent in 2013.

Dell, Lenovo and HP rely on PC sales for their future growth, despite their efforts to diversify business.

On 17 May, Dell said its end user computing revenue declined 9 percent to $8.9 billion in the first quarter of fiscal 2014. The company’s end user computing business mainly includes Dell PCs and laptops. Dell’s operating income in user computing business for the quarter was $224 million, a 65 percent decrease.

On 22 February, HP said Personal Systems revenue declined 8 percent in Q1. Total units were down 5 percent with Desktops units up 10 percent and Notebooks units down 14 percent.

On 23 May, Lenovo said its PC shipments grew 10.2 percent in FY 2013compared to industry decline of 8.1 percent. Gross profit was $4.1 billion, up 18 percent. PC business’ gross margin was 12 percent, while operating profit was $800 million, up 37 percent. Lenovo’s earnings grew 34 percent to $635 million.

IDC says the new forecast reflects a shift in PC buying trends as users increasingly consider alternatives such as delaying a PC purchase or using tablets and smartphones for more of their computing needs.

In place of a limited decline of -1.3 percent in 2013 followed by a gradual increase in volume, the new outlook calls for a more substantial decline of -7.8 percent in 2013 and -1.2 percent in 2014 with shipment volume reaching only 333 million in 2017 – still below the 349 million shipped in 2012 and a peak of more than 363 million shipped in 2011.

IDC expects to see some replacements happen in 2014, particularly in the commercial segment as support for Windows XP expires. However, the commercial market has been conservative with replacements, focusing on individual systems more than large upgrade projects. In addition, workers at many companies already have portable PCs with adequate configurations. The motivation to buy a new system due to falling prices or to switch from a desktop to a portable PC is contributing less to market growth than it did in the past.

“In addition, the BYOD (Bring Your Own Device) phenomenon has moved from smartphones to tablets and PCs with nearly 25 percent of employees in organizations larger than 10 people claiming to have purchased the primary PC they use for work,” said Bob O’Donnell, Program Vice President, Clients and Displays.

In Q4 2012, HP was leading the worldwide PC shipments, according to IDC. HP gained in Asia Pacific and the U.S. HP struggled in EMEA but posted the first year-over-year growth in Asia/Pacific in four quarters. Total volume was nearly flat from a year ago, but better than the overall market.