Global PC Market Contracts in the First Quarter, But Swaths of Growth Remain, According to IDC

FRAMINGHAM, Mass.--(BUSINESS WIRE)--A myriad of factors contributed to the first contraction in the worldwide PC market since the end of the recent recession. Global PC shipments declined 3.2% during the first quarter of 2011 (1Q11) compared to the same time last year, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. Although the forecast for the quarter was already conservative – IDC expected a mere 1.5% growth in shipments – a steady but still cautious business mentality and waning consumer enthusiasm persisted. A spike in fuel and commodity prices and the disruptions in Japan added to the mix, further dampening a market struggling to maintain momentum.

The PC market showed clear indications that after more than a year of impressive purchases, frugality tinged with a shift of focus will be the norm for the time being. Despite promising economic sentiments, mature regions appear to be more focused on necessary replacements as a relative dearth of compelling reasons were present to buy secondary PCs. Emerging markets fared better due to lower saturation rates, but also slowed somewhat with Asia/Pacific (excluding Japan) slowing to a 5.6% growth and China continuing to cool off after a momentous 2010.

"While the consequences of events in the Middle East and Japan remain unclear, these will surely be factors that will influence short term market performance for 2011," said Jay Chou, senior research analyst with IDC's Worldwide Quarterly PC Tracker. "Long-term success will depend on hardware manufacturers being able to articulate a message that is beyond simple hardware specifications. 'Good-enough computing' has become a firm reality, exemplified first by Mini Notebooks and now Media Tablets. Macroeconomic forces can explain some of the ebb and flow of the PC business, but the real question PC vendors have to think hard about is how to enable a compelling user experience that can justify spending on the added horsepower."

"The U.S. and worldwide PC market continues to work through a difficult period that we expect will continue into next quarter, but will start to improve in the second half of the year," said Bob O'Donnell, program vice president, Clients and Displays. "Slower than expected commercial growth in the first quarter failed to offset the ongoing challenges in the consumer market. While it's tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles."

Regional Outlook

• United States – After strong gains for most of 2010, the market has now seen yet another inflection point in the rubber-band effect of the demand cycle that has become prevalent over the past two years. Demand fell back as buyers shifted focus and shipments declined over 10% compared to last year.
• Europe, Middle East, Africa (EMEA) – PC shipments in the EMEA region contracted further than expected in the first quarter, in part the result of continued softness in the consumer space. The business segment also remained cautious, which, combined with sustained high inventory levels in the retail and distribution channel, constrained most vendors' "sell in" levels this quarter. Growth was expected to remain constrained after a difficult year-on-year comparison and the growth achieved in 1Q10, but demand failed to sustain stronger levels to stimulate higher "sales in" levels in March. The additional impact of the recall of Sandy Bridge systems already in the channel only affected small volumes, but had an adverse impact in terms of cancelled and delayed orders and contributed to some additional disruption.
• Japan was slightly below forecast with a year-over-year decline in shipments of 15.9%. Despite an already conservative forecast that reflected a relative lack of public sector projects, the region struggled in part due to supply constraints and the effect of the earthquake which affected much of March.
• Asia/Pacific (excluding Japan) – Shipments increased only 5.6% in 1Q11, similar to the trend in the fourth quarter of 2010. Despite the Lunar Year season, China failed to reach double-digit growth. However, other major markets helped to pick up some of the slack.

Vendor Outlook -

• HP declined 2.8% compared to the first quarter of 2010. The vendor managed to outperform most markets, taking advantage of surging demand in Latin America, but struggled in Asia/Pacific (excluding Japan).
• Dell experienced disappointing sales in its key markets, including lackluster consumer demand in the U.S. and tepid business volume, but the decline was offset by significant strides in emerging markets, including major wins in PRC. The vendor slightly outperformed the market with volume declining at 1.8%.
• Acer was affected by continued turbulence in EMEA, its biggest market. Moreover, the vendor is stilling feeling the pullback in the Mini Notebook and Consumer space, while its upcoming tablets have yet to fill in the void. In the U.S., Acer also ceded its place to a surging Apple in the US.
• Lenovo significantly outperformed the market with shipments posting 16.3% growth. The vendor continued its dominance in Asia/Pacific while maintaining a disciplined channel expansion in other markets. Both its Desktop and Portable PCs grew in double digits compared to the same quarter in 2010.
• Toshiba finished 1Q11 with 3.8% growth. Its unwavering focus on solid designs in the Portable PC space and a relative lack of exposure in the Mini Notebook segment helped it to keep on a steadier course. Solid gains were reported in all markets except EMEA.

Top 5 Vendors, Worldwide PC Shipments, First Quarter 2011 (Preliminary) (Units Shipments are in thousands)
Rank	Vendor	1Q11 Shipments	Market Share	1Q10 Shipments	Market Share	1Q11/1Q10 Growth
1	HP	15,191	18.9%	15,624	18.8%	-2.8%
2	Dell	10,284	12.8%	10,469	12.6%	-1.8%
3	Acer Group	9,039	11.2%	10,733	12.9%	-15.8%
4	Lenovo	8,172	10.1%	7,028	8.4%	16.3%
5	Toshiba	4,809	6.0%	4,634	5.6%	3.8%
	Others	33,062	41.0%	34,712	41.7%	-4.8%
	All Vendors	80,557	100.0%	83,200	100.0%	-3.2%

Source: IDC Worldwide Quarterly PC Tracker, April 13, 2011

Table notes follow the last table

Top 5 Vendors, United States PC Shipments, First Quarter 2011 (Preliminary) (Units Shipments are in thousands)
Rank	Vendor	1Q11 Shipments	Market Share	1Q10 Shipments	Market Share	1Q11/1Q10 Growth
1	HP	4,345	27.0%	4,453	24.7%	-2.4%
2	Dell	3,724	23.1%	4,220	23.4%	-11.8%
3	Toshiba	1,663	10.3%	1,506	8.3%	10.4%
4	Apple	1,375	8.5%	1,254	7.0%	9.6%
5	Acer Group	1,331	8.3%	2,298	12.7%	-42.1%
	Others	3,681	22.8%	4,309	23.9%	-14.6%
	All Vendors	16,118	100.0%	18,040	100.0%	-10.7%

Source: IDC Worldwide Quarterly PC Tracker, April 13, 2011

Table Notes:

• Some IDC estimates prior to financial earnings reports.
• Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.
• PCs include Desktops, Portables, Mini Notebooks and do not include handhelds, x86 Servers and Media Tablets (i.e. iPad and Android-based Tablets). Data for all vendors are reported for calendar periods.

IDC's Worldwide Quarterly PC Tracker gathers PC market data in over 60 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

For more information, or to subscribe to the research, please contact Kathy Nagamine at 650-350-6423 or [e-mail].

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community to make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 47 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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