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PC Shipments Fall Yet Again

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The latest reports from Gartner and IDC reveal that total PC shipments declined in the fourth quarter of 2013, the seventh consecutive quarter of decline.

Industry research firm, Gartner, is of the opinion that the PC industry is going through the most difficult time as annual sales declined 6.9% on a year-over year basis to 85.6 million units in the fourth quarter of 2013. The decline in global PC shipments is largely due to a shift in consumer preference toward tablets and mobile devices in emerging markets.

As per data provided by IDC, PC shipments contracted 5.6% on a year-over year basis to 82.2 million units in the fourth quarter of 2013. The decline was narrower than the research firm’s forecast of a 6.0% drop in 2013, aided by growth in the commercial market. Moreover, for full year 2013, PC shipments declined 10.0% on a year-over-year basis, primarily due to the continued shift in consumer preferences toward mobile devices. But the research firm also stated that the PC market in developed markets such as the U.S. appeared to be stabilizing, with tablet cannibalization tapering off.

PC makers such as Hewlett-Packard Company (HPQ - Free Report) and Dell Inc. have incurred heavy losses in their PC business. This decline resulted in Hewlett-Packard losing ground to Lenovo in the fourth quarter.

Another major reason for the decline in PC sales is related to the cost of the devices. In the emerging markets, consumers are opting for relatively inexpensive mobile computing devices such as tablets at the entry level.

As per data provided by Gartner, Lenovo, with an 18.1% share of shipments, remained the market leader ahead of H-P. Additionally, shipment volumes increased 6.6% year over year.

Hewlett-Packard slipped to the second position with a 16.4% share of shipments, up a marginal 0.1% on a year-over-year basis. Shipment volume declined 7.2%.

Dell secured the third place, with a shipment share of 11.8%, up from 10.4% a year earlier, along with increase in shipment volume of 6.2%.

Acer occupied the fourth place with a 7.8% share of shipments compared with 8.7% in the year-ago period. Additionally, shipment volumes also dropped 16.0%.year over year. IDC’s data more or less matches with Gartner, but is not exactly the same.

H-P secured the top spot in the U.S. with a 26.5% share of the market, followed by Dell with 22.8% share. Apple (AAPL - Free Report) came in third, with a 13.7% share, down from 9.9% in the year-ago quarter. Lenovo held the fourth position with strong U.S. shipments and a 9.7% share of the market. It shipped 1.52 million units, following Apple’s 2.17 million units.

We believe that the continuous decline in PC shipments raises a question regarding the future of the PC industry. The decline will badly hurt the business prospects of companies relying substantially on the sale of PC’s. This apart, the allied industries related to PC, such as IT security service providers like Symantec Corp. (SYMC - Free Report) and Intel’ (INTC - Free Report) MacAfee may also feel the heat due to declining PC sales.  The ability to innovate and migrate to mobile platforms and/or data centers may be the only possible solution for these players.

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