PC vendors are in for a tough time ahead as the latest IDC
report revealed that PC shipments are expected to decline 9.7% in
2013. The current annual projection worsened from the research
firm's earlier forecasts of a 1.3% drop (projected in March) and
a 7.8% decrease (forecasted in May) for 2013, primarily due to
the continued shift in consumer preferences toward mobile
What's worse, IDC traces the slump to softness in emerging
markets, which has for some time supported growth. PC shipments
in emerging markets are expected to be down 9.8% in 2013, steeper
than the 9.4% year-over-year decline in mature markets.
China appears to be the main reason for the lowered forecast,
due to continued shift in customer preferences toward tablets and
smartphones. IDC says that some inventory has accumulated in the
Despite these mundane and disappointing 2013 projections, IDC
expects the rate of decline to moderate and a slow rebound in PC
shipments after 2014 aided by system refreshes and businesses
opting for system migrations beyond Windows 7. However, the lack
of new and enhanced applications could pose challenges.
The PC market is already in the doldrums as the second-quarter
PC shipments were down 11.7% from the year-ago period. The top 3
global PC vendors - Lenovo,
) - have not only recorded a decrease in shipments but also
contractions in market shares. On a geographic basis, PC
shipments were down across the U.S., the EMEA and the
We believe that the emergence and rapid adoption of handheld
computing devices from
), Samsung and other Asian companies are cannibalizing PC sales
and this trend may be expected to continue.
This also raises a question about the future of the PC
industry and the prospects of companies relying substantially on
the sale of PC's (H-P and Dell). Related markets, such as
security are also feeling the pinch; with important players like
) exiting the market altogether.
We believe that the ability to migrate to mobile platforms
and/or data centers may be the only possible solution for these
Currently, Hewlett-Packard, Dell, Apple and Symantec carry a
Zacks Rank #3 (Hold).
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