PC Market Growth Evaporates in Fourth Quarter as Financial Crisis Hits Home, According to IDC
FRAMINGHAM, MA - JANUARY 14, 2009 - Despite market optimism early in the fourth quarter, the pace at which the economic environment unraveled and the extent to which PC purchases were affected was faster than anticipated. Following roughly six years of growth, with the last five averaging 15% increases, worldwide PC shipments were down 0.4% year on year in the fourth quarter of 2008 (4Q08), according to IDC's Worldwide Quarterly PC Tracker. The dramatic slowdown was enough for a sequential decline of 2.5% from the third quarter in place of an expected increase for the holiday season.
The weakening economic environment, including falling home and stock values, deteriorating credit, and implications for trade and consumer spending, was clearly the dominant factor limiting growth. Low-cost portables, vendor competition, and holiday promotions were simply not enough to overcome the economic tide, even with the market for mini notebooks (also known as netbooks) taking off. Growth of portable PCs was cut roughly in half from nearly 40% year on year in the first three quarters of 2008 to roughly 20% in the fourth quarter. Meanwhile, the pressure on desktop PCs pushed volume down roughly 16% from a year ago after only a small decline earlier in the year. Mini notebook volume is estimated at near 5 million units in the fourth quarter, bringing the total for 2008 to about 10 million, accounting for nearly 7% of total portables, with shipments expected to double in 2009.
Despite the dramatic slowdown in fourth quarter shipments, annual volume was up 10.5% in 2008. This was on par with 2006, when some vendors struggled with the accelerating transition to portables and replacement rates dropped with economic uncertainty and the pending launch of Vista.
“For all that’s been said about this recession being different than 2001, the drop in PC growth from mid-teens the preceding year to near flat growth in the most recent quarter shows that the impact of this crisis looks similar to the last time around,” said Loren Loverde, program director for IDC’s Worldwide Quarterly PC Tracker. ”It is tempting to argue that international markets will be less affected, or that low prices and the transition to portables will limit the impact, but the market has taken a serious hit and the competitive environment along with a race to low-cost portables could easily undermine profits from mobile computing. I won’t be surprised if recovery gets pushed further into 2010 as this crisis unfolds.”
“As expected, demand for PCs in the U.S. faced a challenging environment, with a substantial reduction in spending among both consumer and commercial segments amid tightening credit, eroding confidence, and growing unemployment. Not only unit growth was constrained, but the value of the market also shrank as a result of competitive pricing and the introduction of lower-priced mini notebooks,” said Doug Bell, research analyst, United States Quarterly PC Tracker. “Unfortunately, the first half of 2009 looks pretty shaky as the economic fundamentals need to recover before spending on PCs will resume.”
Regional Outlook -
* United States – While the United States came in below expectations, the change in growth from the first three quarters was not as dramatic as in other regions. This reflects relatively slow growth early in the year and the unexpected speed with which the financial crisis spread to other regions. Tighter budgets across segments were evident in a 16% decline in Dell volume, and a decline of 3% from HP. Nevertheless, the next three vendors (Acer, Apple, and Toshiba) all managed year-on-year gains with growth in portables.
* Europe, Middle East, Africa (EMEA) – PC market growth slowed to single-digits, but remained positive despite the global recession. As anticipated, Portables remained a key market driver with growth of roughly 25% despite slowing from previous quarters. Portable PC adoption continued to be fueled by consumer demand in the run-up to Christmas and the strong vendor and telco push of mini notebooks. Nevertheless, the desktop market contracted further, with continued cannibalization from portables and a slowdown in business renewals.
* Japan – The Japanese market was fairly resilient, coming in slightly above projections and ahead of 3Q08 growth. Desktop volume declined notably, but portables compensated. The global credit crunch put some pressure on spending, but a relatively stable economy and strong currency helped drive growth along with strong mini notebook shipments.
* Asia/Pacific (excluding Japan) – Economic pressures had a significant impact on China and India in the fourth quarter while channel issues added to the challenges in India. Other countries in the region also faced challenges including disruptive politics and exchange rates. More cellular operators started to provide mini notebook bundles, but the results of this have been mixed and were unable to sustain shipment volume in the region.
Vendor Highlights
* HP managed to stay ahead of the market with single-digit growth and easily held the top PC vendor slot this quarter. Weak sales in Asia/Pacific (excluding Japan) and the United States weighed down worldwide growth, although EMEA and Japan saw resilient double-digit increases, even with the grim economic environment. HP’s lead in PC shipments will likely help the company continue to weather the economic downturn.
* Dell had disappointing results in the United States and EMEA, with a significant drop in U.S. volume. The news was softened by across-the-board growth in emerging markets with additional growth from mini notebook shipments in Japan. Expanding mini notebook SKUs across the price spectrum should continue to enhance Dell’s position in the market.
* Acer – Efforts to penetrate the retail channel helped Acer significantly increase shipments in the United States despite competitive and economic pressure. Although pressures are likely to increase, the broader channel coverage and expanded low-cost offering should help the company grow. Nevertheless, Acer saw growth in core European markets slow quickly in the fourth quarter, particularly in emerging markets of Central Europe, Middle East and Africa (CEMA).
* Lenovo's struggles reflected the softening worldwide economy as the company announced aggressive restructuring and layoffs moving into the new year. Several mature regions saw year-on-year growth decline by double-digit rates, although Lenovo limited its losses with only single-digit declines in EMEA and its home turf in Asia/Pacific. The company had some recent successes with double-digit growth in Latin America and expansion into the server market using IBM licensed technology.
* Toshiba saw overall growth near 20% with solid growth in all regions except APeJ. The company continues to benefit from its portable focus, and outpaced worldwide portables growth in the fourth quarter.
Top 5 Vendors, Worldwide PC Shipments, Fourth Quarter 2008
(Preliminary)
(Units Shipments are in thousands)
Rank Vendor 4Q08Shipments MarketShare 4Q07Shipments MarketShare 4Q08/4Q07Growth
1 HP 15,190 19.6% 14,726 19.0% 3.1%
2 Dell 10,616 13.7% 11,325 14.6% -6.3%
3 Acer 9,112 11.8% 7,272 9.4% 25.3%
4 Lenovo 5,549 7.2% 5,830 7.5% -4.8%
5 Toshiba 3,670 4.7% 3,054 3.9% 20.2%
Others 33,169 42.9% 35,444 45.6% -6.4%
All Vendors 77,305 100.0% 77,651 100.0% -0.4%
3 Acer (Merged) 9,112 11.8% 7,891 10.2% 15.5%
Source: IDC Worldwide Quarterly PC Tracker, January 14, 2009
Table notes follow the last table
Top 5 Vendors, United States PC Shipments, Fourth Quarter 2008
(Preliminary)
(Units Shipments are in thousands)
Rank Vendor 4Q08Shipments MarketShare 4Q07Shipments MarketShare 4Q08/4Q07Growth
1 Dell 4,606 26.5% 5,510 30.6% -16.4%
2 HP 4,372 25.1% 4,522 25.1% -3.3%
3 Acer 2,074 11.9% 1,527 8.5% 35.8%
4 Apple 1,246 7.2% 1,159 6.4% 7.5%
5 Toshiba 985 5.7% 897 5.0% 9.8%
Others 4,102 23.6% 4,396 24.4% -6.7%
All Vendors 17,386 100.0% 18,011 100.0% -3.5%
3 Acer (Merged) 2,074 11.9% 1,527 8.5% 35.8%
Source: IDC Worldwide Quarterly PC Tracker, January 14, 2009
Table notes follow the last table
Top 5 Vendors, Worldwide PC Shipments, 2008 (Preliminary)
(Units Shipments are in thousands)
Rank Vendor 2008Shipments MarketShare 2007Shipments MarketShare 2008/2007Growth
1 HP 56,971 19.2% 50,559 18.8% 12.7%
2 Dell 44,438 15.0% 40,017 14.9% 11.0%
3 Acer 32,506 10.9% 21,205 7.9% 53.3%
4 Lenovo 21,905 7.4% 20,234 7.5% 8.3%
5 Toshiba 13,713 4.6% 10,961 4.1% 25.1%
Others 127,708 43.0% 126,074 46.9% 1.3%
All Vendors 297,240 100.0% 269,051 100.0% 10.5%
3 Acer (Merged) 32,506 10.9% 26,048 9.7% 24.8%
Source: IDC Worldwide Quarterly PC Tracker, January 14, 2009
Table notes follow the last table
Top 5 Vendors, United States PC Shipments, 2008 (Preliminary)
(Units Shipments are in thousands)
Rank Vendor 2008Shipments MarketShare 2007Shipments MarketShare 2008/2007Growth
1 Dell 20,287 29.5% 19,645 29.3% 3.3%
2 HP 17,064 24.9% 16,761 25.0% 1.8%
3 Acer 6,256 9.1% 3,860 5.8% 62.1%
4 Apple 5,255 7.7% 4,182 6.2% 25.7%
5 Toshiba 3,770 5.5% 3,503 5.2% 7.6%
Others 16,034 23.4% 19,080 28.5% -16.0%
All Vendors 68,665 100.0% 67,030 100.0% 2.4%
3 Acer (Merged) 6,256 9.1% 6,377 9.5% -1.9%
Source: IDC Worldwide Quarterly PC Tracker, January 14, 2009
Table Notes:
Some IDC estimates prior to financial earnings reports.
Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.
PCs include Desktops, Portables, Mini Notebooks, and x86 Servers and do not include handhelds. Data for all vendors are reported for calendar periods.
Data for Acer includes shipments for Gateway's Consumer business starting in Q4 2007, and only Acer data for prior quarters. This reflects the legal status of the companies, which merged during the fourth quarter of 2007.
Data for Acer also includes shipments for Packard Bell starting in Q1 2008, and only Acer (including Gateway Consumer but not Packard Bell) data for prior quarters. This reflects the legal status of the companies, which merged during the first quarter of 2008.
IDC's Worldwide Quarterly PC Tracker gathers PC market data in 55 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.
For more information, or to subscribe to the research, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.
About IDC
IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.
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For more information, please contact:
Loren Loverde
lloverde@idc.com
305-351-3115
Doug Bell
dbell@idc.com
508-935-4698