PC shipments, though a continually disturbing factor so far,
have showed signs of improvement of late. As per the latest
report provided by research firm IDC, 2014 PC shipments are
expected to contract 6.0%, marginally lower than the research
firm's earlier forecast of a decline of 6.1% predicted in March
this year. The improved estimate is largely due to stabilization in
Western Europe and higher-than-expected sales in other mature
The research firm also stated that demand for tablets continues to
slow down this year, leading to the stabilization in the PC market.
The system refreshes and enterprise system migrations beyond
) XP operating system are the primarily factors driving desktop PC
shipments. We believe that PC market growth will be moderate in the
next few years, as enterprises are keen to buy computers rather
than opting for tablets and mobile devices.
While the outlook for the PC market appears to be improving
somewhat, overall PC shipments continue to be hurt by consumer
preference for tablets and mobile devices in emerging markets. IDC
had earlier stated that PC shipments declined 9.8% to 315.1 million
units in 2013, largely as a result of an 11.3% decline in emerging
markets to 182.1 million units.
The emerging markets were once considered to be the key growth
driver but now pose challenges primarily due to macroeconomic
weakness and political turmoil. According to BI Intelligence as
quoted by CNET, one out of five persons in the world owns a
smartphone and the numbers are expected to increase.
Recently, IDC projected that smartphone shipments worldwide will
likely reach 1.2 billion units this year, up from 1 billion units
in 2013. Furthermore, the upside will probably be sustained with
the smartphone market reaching 1.8 billion units by 2018.
Three major operating systems likely to dominate the smartphone
) iOS and Microsoft Corp.'s Windows Phone software.
What's worse, IDC also anticipates PC shipments to decline from
315.1 million units in 2013 to 293.6 million units in 2014. In
fact, the decline in the PC industry is expected to continue,
coming down to 287.3 million in 2018.
Another major reason for the decline in PC sales is the cost of the
devices. In emerging markets, consumers are opting for relatively
inexpensive mobile computing devices such as tablets at the entry
We believe that the continuous decline in PC shipments raises a
question about the growth of the PC industry. The decline will
badly hurt the business prospects of companies like
) and Intel that rely substantially on the sale of PCs. The
ability to innovate and target new markets may be the only possible
solution for these players.
Currently, Microsoft, Hewlett-Packard and Apple all carry a Zacks
Rank #3 (Hold).
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