Canalys: Short-term challenges mount for the PC market

The PC market has managed to deliver increased revenues even as shipments fell in the first quarter, as the market starts to settle after two years of coronavirus.

According to Canalys figures, the global PC market saw revenues improve by 15% in Q1 even with a 3% decline in shipments, which was the first fall since Q1 2020.

Softening consumer demand and the war in Ukraine were two of the reasons why Q1 saw shipments fall, but revenues were boosted by demand for more expensive models and in terms of form factor, laptop demand shrank by 6%, with desktops rising 13% year on year.

Canalys expressed confidence in the prospects for the PC market, arguing that the last two years of the pandemic have changed the use of the technology and put the PC back at the heart of working, learning, gaming and entertainment for many users.

“Vendors and their shareholders have reason to cheer, as the PC industry’s revenue growth streak continued,” said Canalys principal analyst Rushabh Doshi.

“People are using their PCs more often, for longer and for a greater range of tasks than ever before. The last two years have greatly expanded the installed base, with over 150 million notebooks and desktops added between 2019 and 2021.”

Doshi said those market watchers who liked to talk down the PC market would struggle with the prospects for further growth already out in the market.

“Even if customers are forced to delay purchases due to rising prices in the short term, a large wave of device refresh is inevitable, especially given that more than 50% of active devices are more than four years old,” he said. “Meanwhile, commercial demand will remain strong this year even as consumer and education purchasing falters.”

There have been some questions around what the impact of hybrid working would be, but even on that issue, Doshi weas upbeat. “The resumption of workplace activity at close to pre-pandemic levels, coupled with hybrid and remote workers needing higher-specified PCs to maximise productivity, means business IT expenditure will remain elevated in 2022,” he said.

In terms of the vendor market share positions, the status quo remained, with Lenovo holding the lead, followed by HP and Dell. Not all suffered the same fortunes, with some suffering declines in Q1, giving their rivals hope that the rankings could change in the future.

The top five was completed by Apple and Asus, which gained fifth spot for the first time since Q3 2017, thanks to 24% growth in the quarter.

Although the long-term prospects for the PC market look fairly good, the short term is another matter and several factors are converging that will cause vendors and channel partners some challenges.

“The first quarter of 2022 brought a fresh wave of headwinds to the PC market,” said Ishan Dutt, senior analyst at Canalys. “Seismic global events have had a negative impact on both the demand and supply side, hitting the industry at a time when consumer and education purchases have both naturally slowed after the highs of last year.

“The war in Ukraine has exacerbated the inflationary environment in major markets by driving up the price of commodities ranging from oil and gas to metals to foodstuffs. In parallel, Covid-related lockdowns in key Chinese cities such as Shenzhen and Shanghai have created new bottlenecks in manufacturing and distribution, just as vendors and the channel were beginning to find their feet.”

Dutt added: “With no clear timeline on when these issues will be resolved, and the possibility of other black swan events, the industry must be prepared to tackle a new set of challenges and respond with the same resilience it has showed over the last two years.”