Personal-computer shipments suffered their sharpest year-over-year decline in years last quarter, but how many years depends on the performance of Apple Inc.
On Monday, research firms International Data Group and Gartner both released estimates of world-wide second-quarter PC shipments, and both show a double-digit percentage decline back to levels from before the COVID-19 pandemic launched a boom in computer sales. While Gartner characterized the drop as the "sharpest decline in nine years," IDC told MarketWatch that "from a growth rate perspective," it's the worst drop their analysts have tracked since they started covering the PC market in the mid-1990s.
IDC reported that shipments dropped 15.3% to 71.3 million, the second quarterly decline in a row and a deeper drop than the single-digit one seen in the first quarter, with an analyst saying that that consumer demand "is at risk of perishing in the long term." Gartner reported that shipments fell 12.6% from last year to 72 million.
The discrepancy lies in Apple $(AAPL)$: Gartner estimates Apple shipments rose 9.3% to 6.4 million units, but IDC tracked a 22.5% decline to 4.8 million units. Gartner Research Director Mikako Kitagawa told MarketWatch she could not speak for IDC's figures, but she said the firms have different historical numbers that affect growth and decline rates, and that her estimates "count all Mac devices," based on the assumed "steady refresh demands of M1 Mac, which was accelerated by the business users."
See also: Mac renaissance shows Apple winning 'in a market where everyone counted them out'
IDC's Mobile Device Trackers research manager Jitesh Ubrani also told MarketWatch he could not comment on Gartner's research or methodology, but offered some more color.
"What I will say is that based on IDC's research, we heard that Apple was targeting higher volumes 2Q but due to lockdowns and worsening logistics their volume was below target and our preliminary research landed us at the 4.8M," Ubrani told MarketWatch in emailed comments. "June in particular was a bad month as volumes dipped below targets."
The firms agreed that the decline was relatively broad-based, blaming persistent supply-chain issues, China's COVID lockdowns and macroeconomic headwinds, with the biggest declines in shipments coming from U.S. heavyweight HP Inc. $(HPQ)$
"Fears over a recession continue to mount and weaken demand across segments," Ubrani said in a statement.
"Consumer demand for PCs has weakened in the near term and is at risk of perishing in the long term as consumers become more cautious about their spending and once again grow accustomed to computing across device types such as phones and tablets," Ubrani said. "Meanwhile, commercial demand has been more robust although it has also declined as businesses delay purchases."
"The decline we saw in the first quarter of 2022 has accelerated in the second quarter, driven by the ongoing geopolitical instability caused by the Russian Invasion of Ukraine, inflationary pressure on spending and a steep downturn in demand for Chromebooks," Gartner's Kitagawa in a statement.
"Supply chain disruptions also continued, but the major cause of PC delivery delays changed from component shortages to logistics disruptions," Kitagawa said. "Enterprise buyers continued to experience longer PC delivery times than usual, but the lead times began to improve by the end of the second quarter, partially because key cities in China reopened in the middle of the quarter."
IDC said this year's second-quarter sales are similar to those at the beginning of the COVID-19 pandemic, when volumes for the second quarter of 2020 were 74.3 million, IDC said. PC sales boomed during the first two years of the pandemic as consumers and businesses stocked up to work from home and use videoconferencing software such as Zoom Video Communications Inc(ZM) that taxed older computers.
China's Lenovo Group Ltd. led the pack in shipments, according to IDC tabulations, with shipments declining 12.1% to 17.5 million units, as HP shipments dropped 27.6% to 13.5 million units. Dell Technologies Inc.'s $(DELL)$ shipments declined 5.3% to 13.2 million units, while Acer Inc.'s shipments dropped 19.2% to 5 million units. Apple and Asustek Computer Inc. tied for a "statistical" fifth place, IDC said.
Gartner reported that Lenovo shipments fell 12.5% to 17.9 million units, HP shipments dropped 27.5% to 13.5 million units, and Dell shipments declined 5.2% to 13.3 million units. Gartner also said that Acer shipments fell 18.7% to 5.1 million units, and Asustek shipments fell 4.3% to 4.7 million units.
There don't seem to be any signs of improvement, Citi Research analyst Christopher Danley said in a Monday note. While June notebook shipments were up 31% month-over-month, that was below his expectation of a 40% rise.
"We expect PC demand to continue to decline throughout 2022 in to 2023," Danley said. The analyst reiterated his neutral ratings both on Intel Corp. $(INTC)$ and Advanced Micro Devices Inc. $(AMD.AU)$ although Intel appears more at risk when it comes to a PC downturn.
Danley said that while AMD derives about 35% of its revenue from the PC industry, 90% of Intel's sales come from PC and server segments.
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