PC sales are in serious trouble. According to Gartner, sales contracted a further 10.9% in Q2 2013 with total shipments falling to 76 million units. What's worse, for PC vendors, is that the stated explanations for why sales are cratering have nothing to do with Windows 8, ultrabook prices, or weak macroeconomic conditions. The problem, in a word, is tablets. At this point, Lenovo, HP, Dell, Acer, and Asus are slugging it out amongst each other for pieces of a shrinking pie.
That said, of the top five OEMs, Lenovo is clearly winning the fight. The company snapped up 16.7% of the total market in Q2 2013, up from 14.9% in Q2 2012. That increase was almost enough to offset the decline in unit volume, from 12.76 million systems in 2012 to 12.67 million in 2013. No one else got off so lightly; HP and Dell both shrank (4% and 5% respectively) while Asus took a 21% year-on-year decline. Acer got hit even worse, with a 35.3% decline in sales. The steep sales drops from both companies are linked to their decision to exit the high-volume/low-margin netbook markets.
Regional trends
In emerging markets, Asia-Pacific, and EMEA (Europe, the Middle East, and Africa) tablets generally ate everybody's lunch. North American trends were a bit brighter, where PC sales were down just 1.4% compared to Q2 2012. The US market also grew 8.5% sequentially, which isn't too shabby under the circumstances. This is attributed to an uptick in professional sales and, possibly, the end of Windows XP. In the US market, Dell picked up an additional 6.4% of the market from Q2 2012 through Q2 2013, while Apple (non-iPad), HP, and Toshiba sales all declined. Lenovo was the biggest mover year-on-year, with 10.1% of the market in Q2 2013, up from 8.3% in 2012 (a gain of 19.7%).
The United States, however, is a tiny bit of upside in an ocean of bad news. Worldwide, tablets are chewing into the PC business at a ferocious rate; Gartner claims that they've become the first device of choice over a low-cost desktop or laptop in developing markets.Mounting desperation
If Gartner is right, the PC market is going to be downright interesting these next few months. No one believes that Windows 8 is responsible for the downturn in the market any longer. Microsoft's new OS may have done nothing to ignite the market, but it's not responsible for a sudden surge in Android tablet sales. Furthermore, Windows 8 on tablets has always come off as a far better product than its desktop/laptop equivalent. Ultrabooks may not have moved heaven and Earth, but no one is pinning the blame on them, either.
It's only been two years since the first armada of Android tablets sallied forth to do battle with Apple's iPad, slammed into the storm of consumer expectations, and sank. Windows 8 tablets may be at a similar point in their life cycles, but the PC OEMs don't have margins enough to survive protracted battles for minimal market share against Android tablets. AMD could clean up this fall if beleagured companies launch Temash-based hardware in a bid for relevance, but only if those products then sell in volume. Intel, of course, has Bay Trail coming, but that launch isn't expected until the end of the year.
If the back-to-school and professional markets don't drive significantly more PC sales than expected it's going to be an ugly fall. HP's talk of spinning off the PC unit is starting to look prescient. The company's claims of returning to the smartphone market after wasting all the goodwill and expertise it acquired when it bought Palm illustrate how bad things have gotten, while Dell struggles to take itself private, Carl Icahn's machinations notwithstanding.
Fun times.
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