PC Market Slump to Continue in 2013

The U.S.-based information technology (IT) research firm International Data Corporation (‘IDC’) forecasts yet another year of expected decline in the PC market. After witnessing a tough 2012, IDC predicts year-over-year shipment decline of 1.3% in 2013, as against the previous expectation of 2.8% growth. But the projected decline is somewhat better than a decline of 3.7% registered in 2012.

The year 2012 was a difficult one for the PC industry mostly due to the growing popularity of tablets, slow adoption of Microsoft Corp.’s (MSFT - Analyst Report) Windows 8 and ongoing macro uncertainties, reflected by a soft holiday season and a tough IT spending environment. IDC also noticed a declining trend in the emerging markets as their transformation into matured markets is limiting growth.

In 2012, Hewlett-Packard Co. (HPQ - Analyst Report) occupied the leading position with respect to shipments and market share. H-P was followed by Lenovo and Dell Inc. (DELL - Analyst Report).

IDC expects most of the factors pulling down the PC market to persist in 2013 but expects better statistics from the emerging markets. Moreover, the research firm forecasts a better second half of 2013 buoyed by potential wide acceptance of Win 8 and a likely PC refresh cycle.

The declining PC market has forced Hewlett-Packard and Dell to diversify. Recently, H-P introduced a host of new offerings including a new BPO (business process outsourcing) solution, three desktop printers and two media players. H-P is also trying its luck with Slate 7, a tablet running on Google Inc.’s (GOOG - Analyst Report) Android platform.

Both H-P and Dell are also craving for a wider exposure in the high-margin server, storage, networking and cloud computing markets. For this purpose, the companies have acquired a number of cloud-based software and hardware companies.

Currently, H-P has a Zacks Rank #2 (Buy) mainly due to its new offerings, its decision to divest WebOS and re-launch its tablet. On the other hand, Dell, which has filed for a leveraged buyout, has a Zacks Rank #3 (Hold).