The worldwide PC market maintained its bullish run in the third quarter of 2019, courtesy of the companies transitioning to Microsoft’s (MSFT - Free Report) latest Windows 10 software. This is evident from the recently released worldwide PC shipment data by Gartner Inc. and International Data Corporation (IDC).
Per Gartner’s preliminary data, PC shipments in the third quarter inched up 1.1% year over year to 68 million units. Going by the IDC report, shipment rose 3% on a year-over-year basis and totaled 70.4 million in the period under review.
Gartner added that PC shipments in the quarter were not impacted by either Intel’s (INTC - Free Report) CPU shortage or the U.S.-China trade war. With the timeline for the potential tariff hike pushed to December 2019, the firm confirmed that the U.S. tariffs on China-manufactured mobile PCs barely affected the PC shipments.
Moreover, Intel’s supply constraint has reportedly pushed leading PC vendors toward Advanced Micro Devices and Qualcomm, which is enabling to realign their processors in the PC market where Intel has a strong foothold.
According to Gartner, Lenovo (LNVGY - Free Report) , HP (HPQ - Free Report) and Dell Technologies (DELL - Free Report) were the top three vendors, grabbing a combined 64% market share.
How Are the Vendors Placed?
Lenovo has been benefiting immensely from its joint venture with Fujitsu. This China-based company has regained its top berth in the reported quarter with nearly 25% market share per Gartner and IDC.
HP retained the second spot with 23.8% market share per IDC and 22.4% per Gartner.
The company’s focus on product innovation & differentiation, pricing plus marketing and sales activities is yielding results, which is evident from its strength across all key geographies. Notably, the company achieved maximum growth of 9.3% year over year in the quarter among all PC vendors, per IDC.
Dell, which held the third position, recorded the seventh consecutive quarter of PC shipment flourish in the third quarter. Healthy gaming business coupled with strong commercial-centric products portfolio is a boon. The company with a market share of 17.1% witnessed 5.3% growth during the quarter under consideration, going by IDC.
Coming to Apple (AAPL - Free Report) , which is suffering a supply crunch, the company registered a 6.1% decline year over year per IDC. Its 7.1% market share in the period under discussion fell from 7.7% in the year-ago quarter, per IDC. The company ranks fourth per both Gartner and IDC.
Apple’s focus on improving Mac sales is very crucial for the company. The refreshed line-up of MacBook Air and Pro is beneficial, adds Gartner.
The Way Forward
The outlook for the PC market is increasingly unpredictable due to the ongoing U.S.-China trade war and imposition of additional tariffs. The fear of higher tariffs also prompted some PC vendors to ship additional units of desktops and notebooks in the last two quarters, which raises a concern.
Moreover, with the passage of Window’s 10 replacement cycle in January 2020, demand from the business circle is anticipated to weaken, thereby making us apprehensive.
All these factors cause concerns not just for the PC vendors but also the companies dependent on those.
Currently, while Dell carries a Zacks Rank #2 (Buy), stocks like HP, Lenovo and Apple have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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