PCs have been at the heart of access to the Internet and wider digital marketplace for many years. Despite falling behind smart phones in recent years it is still a major component of the ITC industry. In the year to the end of June 2018 236m PCs worth $163b were shipped, while the total installed base reached 842m (see my Figure for market shares of revenue, shipments and installed base). New processors from Intel and AMD and focused marketing campaigns by PC vendors rescued the market from decline in 2017, resulting in positive results in Q2. In the year to the end of June revenues grew by 15.0%, shipments by 10.8% and the installed base by 1.6%. In Q2 itself revenue grew by 8.8% to $39b and shipments by 12.1% to 58m.
Leadership of the PC market is split between three vendors with very different strategies (see my Figure for the quarterly shipments by the top eight on a quarterly basis). In particular:
- HP is the leader in revenues, but second in shipments and installed base measurements. HP Inc.’s broke away from HPE in 2015, following years of debate – driven by its shareholders – about whether or not the two sides of the business would do better if not closely linked. History has shown that this organisational move was good for HP’s client-side activities (PCs represent about two thirds of HP Inc.’s revenues balanced against its more profitable printer business).
- Lenovo is currently the leader in shipments and installed base and second in revenues – it has grown rapidly not only on the opening up of the Chinese market, but also through acquisition and partnership. It bought IBM’s PC business in 20o5 (and its x86 server business in 2014) and Medion in 2011. It also has agreements with both NEC and Fujitsu to supply PCs, replacing manufacturing that proved too difficult to continue for both of these major Japanese companies.
- Dell has taken an opposite approach to HP – choosing to privatise, merge/acquire EMC and drive its business as an integrated full-range supplier. It is currently third in my revenue, shipment and installed base measurements of the PC market. Paying for privatisation means that Dell has reported losses of $12b over the last few years and the integration has benefitted the enterprise more than the client side of its business. Unlike HP Inc. it lost out on the huge rebate in repatriating offshore funds from US tax authorities as part of the Jobs and Tax cuts act. Its advantages however include better volume discounts for components.
Of the other major vendors Apple is the most impressive; for instance it is second to Lenovo in PC revenues in the Asia Pacific region.
At a regional level the Americas is where the PC market has been most successful since 2014 (see my Figure which shows a comparison of unit shipments by region). I expect them to continue to do well – especially as data privacy concerns start to expose some of the dodgy practice of vendors in the smart phone and tablet markets. Although they require more learning to use, PCs give the user more control over the automatic relationships create through Internet and social media interactions.