Dire times ahead for the PC market

The PC market was stalled by the pandemic in 2020, grew dramatically in 2021 and began to shrink in 2022, when supplier revenues began to fall. 2023 is going to be another difficult year due to market saturation in many wealthy countries and a focus of suppliers on newer IoT-based devices steal spending away from this product area. In this post I look at what happened in the last year.

My Figure above shows market shares for shipments, revenue (based on current $US values for each quarter) and the installed base. fell by 2.2% to $219b and shipments – by 6.9% to 269 million. The installed base grew by 1.2% to 1,007 million. The maturity of the PC market is shown by the powerful hold the major suppliers have on it. The consequent shake-out saw Hitachi leave the market in 2007, NEC in 2009, Sony in 2014 and Fujitsu in 2016.

Lenovo – a Chinese vendor whose success is partially based on its acquisition of IBM’s PC business back in 2005 – has been leader of the PC market in unit shipments since 2011 (my Figure above); however it only overtook HP in revenues in 2020 (my Figure below). In 2022 it shipped some 85 million units, up 2.8% on the previous year. It has strong green and LGBT+ strategies. It opened a new factory in Ullo, Hungary in June for server, workstation and other enterprise manufacturing and also renewed its line of AMD-based products. Its PC revenues dropped 2.7% in 2022.
HP has been in second place in shipments since 2015. The average price of its shipped PCs is higher than Lenovo, which historically allowed it to lead the market in revenues until 2020, when its was overtaken. Although it grew its business well in the market upsurge post-pandemic and supply-chain shortage upsurge, its revenues from PC sales dropped 2.6% in 2022.
Up to 2007 in unit shipments and 2006 in annual revenues Dell led the PC market; however it has been in third place behind both Lenovo and HP since then. Dell is keen on its reputation for cybersecurity measures, which include providing tamper-proof seals on the BIOS when shipping them in Asia Pacific and EMEA regions. It was just about the only supplier to see its PC revenues grow in 2022 (8.9%).
Apple was in fourth position in the PC market in 2022, where its Macintosh is a high-end and aspirational product form many users. Its success was witnessed by matching Dell in sales for the period between the second half or 2020 and first half of 2021. Nevertheless it saw a decline of 4.4% in PC sales in 2022 overall.

My Figure above shows the major vendors’ annual revenues between 2003 and 2022. The declining status of Samsung, Acer and Microsoft is symptomatic of a mature market in which the four larger players have increased their standings, stealing market share from smaller suppliers.

My Figure above shows the regional spending on PCs by region in current dollar (solid lines) and constant 2005 rates (dottted lines) for Asia Pacific (calculated in Yuan Renimbi) and EMEA (calculated in Euros). It shows that PC sales are stronger in the Americas than they are outside and that, although the market in Asia Pacific is bigger than in EMEA when measured in current dollar exchange rates, the gap is smaller using constant rates.
What of the rest of 2023? The signs for a strong market aren’t great. Intel’s Q4 2022 revenues from its client group dropped 35%, Microsoft’s More Personal Computing division was down 24% and AMD’s client group’s declined by 51%. The largest assembler Foxconn’s revenues dropped 12% in November and December, following a 41% increase in October. I expect the PC market worldwide will decline dramatically in Q1 2023 and see no reason for growth for the full year either.