IDC forecasts deeper declines in PC shipments for 2014

PC-monitor-graphShipments of new personal computers, most of them equipped with Microsoft Windows, will face greater declines in 2014 than earlier anticipated, IDC said Tuesday.

IDC said that PC shipments will drop by 6% from 2013 to approximately 296 million, a smaller number than it forecast three months ago, when it said global shipments would decline 4% in 2014.

Last year, shipments contracted by 10% compared to 2012, dropping to about 315 million new PCs.

IDC revises its numbers quarterly, said Rajani Singh, an analyst with IDC, who pointed out that as the market changes, the company modifies its forecasts.

In 2013, both IDC and rival Gartner revised their predictions for the year several times, each time by lowering their forecasts and increasing the year-over-year contraction.

“I do think that this contraction will eventually fade away,” said Singh in an interview Wednesday. “The market will start showing some stabilisation. I’m not bullish, but there are signs of a recovery [from the constant contractions].”

If IDC is right and shipments total about 296 million PCs, that would put the business behind 2008, when approximately 300 million were shipped from factories. That was more than a year before the appearance of Apple’s iPad, one of the causes of the tectonic shift from personal computers to more mobile devices, including smartphones and tablets, and a long way from “Peak PC” of 364 million in 2011.

IDC now expects that annual shipments will come in under the 300-million mark through 2018, as far out as it dared to forecast, when the total will be about 292 million.

Singh argued that that number is still huge. “That’s 300 million fresh PCs to ship this year,” she said of 2014.

True. But for an industry predicated on growth, it’s dismal news. Microsoft, which derives a big chunk of its revenue and an even larger percentage of its profits from licensing Windows to OEMs (original equipment manufacturers), will face an impossible task trying to grow the former.

Amy Hood, Microsoft’s CFO, is expecting tough times in the near-term. In January, when she outlined her guidance for the March 2014 quarter, she said the group responsible for licensing Windows to OEMs would bring in between $4.1 and $4.3 billion in revenue, which would be between 1% and 6% less than the same quarter in 2013.

“There is little question that the PC market remains a drag on Microsoft, and the company’s own statements reflect that,” said Singh in a note she wrote to clients several weeks ago.

PC shipments to emerging markets, once the growth area, will contract even more than in mature markets, like the U.S., Western Europe and Japan, IDC predicted, citing that as a major cause of the continued slump.

Other factors contributing to the deeper declines in 2014, said IDC, are more-conservative estimates of touch-enabled PC sales; the tailing off of purchases by businesses to replace machines now running Windows XP; the culmination of several large-scale, government-driven projects in some countries; and the continued erosion of shipments by smartphones and tablets.

It could be worse, of course. Which is what some analysts – Ben Bajarin of Creative Strategies, for one – expect. Although Bajarin is convinced that a major refresh of existing PCs may be in the short-term cards, he’s skeptical that IDC’s furthest-out forecast would hold.

“Short term blanket due to refresh. Followed by full contraction. They [IDC] are saying 280 [million] in 2018. Too high for me,” Bajarin tweeted Wednesday. IDC actually predicted nearly 292 million PCs will ship in 2018.

“It is an extremely saturated market,” Singh acknowledged, sticking to her guns. “It may take two, three or four quarters, but stabilisation will start in the U.S. and spread from there to other regions.”

IDC predicts that PC shipments will slump another 6% in 2014, with smaller declines each year through 2018.


Originally published on Computerworld (US). Click here to read the original story. Reprinted with permission from Story copyright 2024 International Data Group. All rights reserved.
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