PC Shipments to Drop Further in 2013 - Analyst Blog


According to the latest report from IDC, PC shipments are expected to decline 10.1% to 314.2 million units in 2013. The current annual projection deteriorated from the research firm's earlier forecast of a 9.7% decline. The decline in global PC shipments is largely due to a shift in consumer preference toward tablets and mobile devices in both mature and emerging markets.

What's worse, IDC traces the slump to softness in emerging markets, which has for some time supported growth and is considered to be the key growth driver. PC shipments in emerging markets are expected to be down 11.3% to 182.1 million units in 2013, steeper than the 8.4% year-over-year decline in mature markets. In May, IDC forecast a decline of 7.8% in emerging markets.

China appears to be the main reason for the lowered forecast, due to the continued shift in customer preference toward tablets and smartphones.

Despite the disappointing 2013 projections, IDC expects the rate of decline to moderate in 2014, aided by system refreshes and enterprise system migrations beyond Windows 7. PC shipments are forecast to increase 0.4% in 2017, primarily due to growth in emerging markets that will likely offset the lower PC shipments in the mature markets. However, the lack of new and enhanced applications could pose challenges.

Moreover, according to IDC, commercial PC shipments will hold up better than consumer PCs this year. Consumer PC shipments are likely to be down 15.0% on a year over basis, steeper than the 5.0% year-over-year decline in commercial markets. The lower rate of decline in commercial markets could be attributed to relatively steady PC investment planning because of the need to upgrade from the Windows XP OS.

The top three global PC vendors - Lenovo, Hewlett-Packard ( HPQ ) and Dell - have  recorded a decrease in shipments. To counter the current scenario, these PC vendors are initiating plans to attract consumers with 2-in-1 devices, which incorporate features of both tablets and notebooks. Moreover, chipmaker Intel ( INTC ) and software giant Microsoft ( MSFT ) has also lent their support to the market for these convertibles.

It is worth mentioning that the emergence and continued adoption of handheld computing devices from Apple ( AAPL ), Samsung and other Asian companies are cannibalizing PC sales. According to IDC, in 2013, tablet shipments will increase 53.5% on a year-over-year basis to 221.3 million units. Additionally, IDC predicts that tablet shipments will grow 22.2% in 2014. However, tablet shipments are expected to decline year over year and by 2017 growth will slow down to a single-digit rate.

We believe that the ability to migrate to mobile platforms and/or data centers may be the only possible solution for these players.

Currently, Hewlett-Packard, Microsoft, Apple and Intel all carry a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , HPQ , INTC , MSFT



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