The PC market has been revitalized by the pandemic. In 2021 spending grew by 19% to $217 billion, shipments by 4% to 281 million; even the installed base grew – by 5% to 967 million (my figure above shows annual growth rates since 2006). If no one had more than a single machine, 12% of the world’s population would have a PC. The average price of PCs increased in the year due to shortages of material and other supply chain challenges. The continuing war in Ukraine will is making things even tougher in 2022.
Five suppliers accounted for 86% of the revenue of the market in 2021. Their businesses are the result of a number of key acquisitions over the years and mastery of a number of global challenges where there are significant advantages in large scale economies of scale. In particular:
- Lenovo – the market leader whose international expansion was based on a number of key PC division acquisitions such as IBM (mainly the USA and Western Europe), Medion (Germany), Digibras (Brazil) and Fujitsu (Japan and Western Europe)
- HP – the second largest supplier bought Compaq in 2002 to create a massive PC business. Organizationally the PC business as part of HP Inc., which separated from HPE in 2015. HP also bought workstation specialist Apollo in 1995, Digital Equipment Corporation (DEC) in 1998.
- Dell – the third largest supplier built its strategy on direct sales (as opposed to the three-tier strategies of most other PC companies). It acquired PC gaming specialist Alienware in 2006.
- Apple – has the longest history of all having been a strong supplier of microcomputers before the arrival of the IBM PC in 1981. It continues to take a proprietary approach to its products by building its own hardware, operating systems and applications, avoiding the horizontal market approach of almost all other PC suppliers. Its only relevant acquisition was of the workstation supplier NeXT Computer in 1997.
- Samsung – the South Korean supplier bought US-based AST in 1997, but closed it in 1999 in its failed attempt to establish a stronger US presence. It has been a major supplier of components for other PC and smartphone vendors over the years. It continues in the PC business despite focusing more strongly on smartphones and tablets.
There is a total absence of European, Middle Eastern and African (EMEA) suppliers suppliers in the PC market, which becomes more problematic for the region as new nationalism is chipping away at the extreme globalisation of the market.
The PC market has seen little change it vendor makeup over time. Dell vied with HP in the early 200s before Lenovo broke above both of them in 2011 by buying IBM’s PC business. Apple’s PC revenues have increased slowly year by year to place it just above Samsung for the first time in 2021. Microsoft’s controversial decision to compete with the OEMs of its Windows operating system by launching its Surface products in 2012 has resulted in a steady growth of its PC hardware business. I show annual PC shipments by major vendor in my Figure above.
At a country and regional level there are major differences in vendor success (see my Figure above for market shares by region in 2021); these are likely to grow wider if government sanctions and bans – currently usually by the US against China – continue to grow.
Nevertheless demand for PCs remains strong in each region (see above for my Figure on unit shipments by year).
It will be interesting to see how the rise in component, shipping and packaging prices and government interference affects the future market.