Context warns channel to expect challenging year ahead on the PC front

The channel has been warned that it needs to prepare for challenging conditions in the PC market next year with sales likely to head South in the second half of 2020.

This year has largely followed a pattern with the corporate market remaining strong, fueled by users looking to move away from Windows 7, and the consumer side remaining in the doldrums as users look to spend their money on other formats.

The support for Windows 7 switches off next month but Intel CPU delays have plagued the market all year and made it difficult for some users to make the switch to fresh hardware. That means the same conditions should play out for at least the first half of the year.

Context has looked into its crystal ball and is expecting demand to weaken after January and the CPU problems to continue to be an issue.

Anyone hoping that the consumer side might kick into life and make up for the commercial declines is probably going to be disappointed with demand for desktops and laptops looking weak. Where there will be some interest is around ultra-thin notebooks, Chromebooks and gaming PCs.

The analyst house did signal some positives though with digital transformation set to continue to drive customer investments in hardware, particularly high performance machines that can handle data analytics. That should help keep ASP high and help the channel on the margin front.

“In many ways it was a tale of two markets in 2019 with strong demand in the business sector while consumers decided to spend their money elsewhere,” said Marie-Christine Pygott, senior analyst at Context.

“Although commercial demand will weaken after January as consumer sales remain focused around a small number of segments, there is optimism for the year ahead. Digital growth projects are set to continue apace for enterprises in 2020, driving up demand for high-end PCs, while new form factors could join the current crop of segments on consumer wish-lists, helping to improve channel margins," she added.

In both of their recent result updates both HP and Dell indicated that the Intel CPU shortages issue had taken a toll on PC sales and hit performance.

"IDC is projecting a decline in post Windows 10 which will be a headwind to Client Systems Group in fiscal 2021 overall. In Q3 CSG delivered strong results across commercial. Going forward we remain focus on direct growth and optimizing our channel relationships. We have invested in our sales forces in both small and medium businesses and continue to accelerate growth there," said Jeffrey Clarke, vice chairman, products and operations at Dell, at the end of last month.

"Intel CPU shortages have worsened quarter-over-quarter the shortages are now impacting our commercial PC and premium consumer PC Q4 forecasted shipments," he added.