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Wednesday, January 20, 2016

Global PC Market Continued an Epic Decline in 2015

The Personal Computer (PC) market has been very volatile for several years. Meanwhile, each new year an industry analyst predicts a small recovery, but the forecast results fail to materialize. We've seen this cycle of refutal over and over again.

Case in point: worldwide PC shipments totaled 71.9 million units in the fourth quarter of 2015 (4Q15), reaching a year-on-year decline of -10.6 percent, according to the latest market study by International Data Corporation (IDC ).

Although total shipments were similar to analyst expectations, 2015 still ended as the first year below 300 million units since 2008. The holiday quarter achieved a small boost compared to the prior quarter, but the year-on-year decline in 2015 shipments was the largest in history -- surpassing the decline of -9.8 percent in 2013.

The PC market continued to face persistent challenges from longer-PC lifecycles and competition from mobile phones and media tablets, despite the slowing growth in those markets. However, low-cost high-value Chromebooks remain one of the few bright spots.

Why Traditional PC Vendors Struggle to Adapt

Changes in the computer operating system (OS) market also had a significant impact, with the end of support for Microsoft Windows XP and promotions of low-cost PCs driving a surge in replacements in 2014 that combined with the launch of Windows 10 and a 'free' upgrade program.

While some expensive new ultrabook PCs have been launched in 2015, the worldwide market is responding slowly to new OS and hardware configurations -- deciding when to upgrade and evaluating slim, convertible, detachable, and touch variations vs. more traditional PCs.

Nevertheless, these products have received positive reviews and there's potential for a faster commercial transition to Windows 10 in 2016 than we saw for prior versions of Windows. But once again, this is merely speculation and it's not rooted in trend data to support that belief.

Once again, analysts are 'hopeful' that a miraculous recover will reverse the decline. IDC believes that PC replacements could rise again in 2016, particularly later in the year. Commercial adoption of Windows 10 is expected to accelerate, and consumer buying might stabilize by the second half of the year.

Why the PC Market Outlook Remains Bleak

That being said, unfounded hope is not a viable strategy for PC market development. "Consumer sentiment toward PCs remains a challenge, though clearly there are pockets of growth," said Jay Chou , research manager at IDC.

Detachable media tablets, which are counted separately from PCs, are growing -- but from a small base. Adding those units to PC shipments would boost growth by roughly 6 percentage points in the fourth quarter and 3 percentage points for all of 2015, bringing year-on-year growth for 4Q15 to an overall decline of about -5 percent and -7.5 percent for all of 2015.

According to the IDC assessment, the impact for 2016 will be larger as detachable tablet volume grows, potentially boosting earlier forecasts of PC growth in 2016 from -3.1 percent to growth of 1 to 2 percent. Again, that's merely speculation at this point in time.

Here's the reality, based upon the prevailing trend. The U.S. PC market fell -4.3 percent year over year to 17.4 million units. Although the U.S. dollar has been strengthening in lieu of currency crises in other regions, consumers are not immune to economic concerns that have persisted globally.

Worldwide, Lenovo maintained its top rank for the quarter and all of 2015, exceeding 20 percent market share for the year. Shipments reached nearly 15.4 million units in the fourth quarter, mostly due to strong volume in North America.