PC shipments grew in Q3 2019 thanks to Windows 10 refresh

[steven36]

Windows 10 refresh cycle and sales tax changes in Japan are making all the difference.

 

 

 

 

The PC market grew between 1% and 3% in Q3 2019, according to research firms Gartner and IDC. After six years of quarterly PC shipment declines, 2018 was mixed, with negative, flat, and positive quarters. 2019 is doing slightly better: Q1 was negative, but Q2 and Q3 were positive.

 

Gartner and IDC analysts pointed to the Windows 10 refresh cycle in the business market as contributing to the past quarter’s gain. With Windows 7 hitting end of support on January 14, 2020, it seems like at least some businesses are trying to migrate to Windows 10 last-minute. Gartner said that U.S. tariffs on China-built mobile PCs had a minimal impact, while IDC warned of higher tariffs for PC makers on the horizon.

 

(Gartner also shares U.S.-specific figures and in Q3 2018 found that Microsoft had broken into the top 5 PC vendors. The company has held onto this position every quarter since. But that’s U.S.-only — Microsoft still doesn’t appear on worldwide charts.)

Gartner

Gartner estimates that worldwide PC shipments grew 1.1% to 67 million units in Q3 2019. The top six vendors were Lenovo, HP, Dell, Apple, Acer, and Asus.

 

As you can see in the chart below, Gartner found that in the top six, only Apple and Asus saw declines in PC shipments. The rest of the market was down 9.3%

 

 

Lenovo, HP, and Dell all saw similar growth, though the first two are neck-and-neck. Dell’s growth has slowed, but at least it’s still growing.

“The Windows 10 refresh cycle continued to be the primary driver for growth across all regions, although the magnitude of the impact varied according to local market conditions and the stage of the refresh cycle,” Gartner principal analyst Mikako Kitagawa said in a statement. “For example, in Japan, PC shipments grew 55% in the third quarter of 2019, driven by the Windows 10 refresh cycle and a pending sales tax change. This strong growth helped propel the total worldwide PC market to growth.”

IDC

IDC estimates worldwide PC shipments grew 3.0% to 70.4 million units in Q3 2019. The top five vendors in IDC’s results were Lenovo, HP, Dell, Apple, and Acer.

 

IDC also found Lenovo first and HP second, with Dell rounding out the top three. All three saw growth, while Apple and Acer declined. The rest of the market also declined, by 3.2%. The exact numbers, for your perusal:

 

 

“Commercial demand should accelerate as enterprises work through the remainder of their Windows 10 migration,” IDC research vice president Linn Huang said in a statement. “The number of months until the end of service (EOS) date of Windows 7 can be counted on one hand. With January 14, 2020 drawing nigh, the commercial market should be able to digest the extra inventory over the next several quarters. Supply constraints may loom in subsequent quarters, so excess may not be a bad position for channel inventory through the remainder of the year.”

 

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[steven36]

Windows 10 means we're buying more PCs again, but the boost won't last

 

 

PC sales growth is the strongest for seven years, but it is unlikely to continue for very long.

 

With shipments up 4.7%, the global PC market has had a healthy third quarter in 2019 - its healthiest in seven years, notes a report from technology research firm Canalys. 

 

Since early 2012, when growth hit a record 5.4%, PC sales have been in steady decline. But the latest boost, warns the report, is a reflection of short-term trends, and its effects could wear off as early as next year.

 

In the US, for example, the surge can be attributed to the fact that a round of tariffs is scheduled to take effect on $37 billion-worth of Chinese notebooks and tablets next December. Understandably, producers are building up their inventory ahead of the deadline. 

 

It is in Japan particularly that the context has been a favorable one. With the summer 2020 Olympics approaching, there has been major ramping up of IT infrastructure; and, as the country prepares to increase its consumer tax in October this year, demand for fresh hardware before the change has also surged.

 

This, combined with the fact that Japan has been quick to upgrade to Windows 10, has meant the country has driven the industry's overall growth: shipments for desktops, workstations and notebooks increased by 63% over the last year. 

 

It is not just in Japan that Windows 10 upgrades encouraged demand. A year ago, Canalys's chief analyst Alastair Edwards had already predicted that "Windows 10 refresh will continue to be the main driver of commercial demand for PCs in 2019".

 

More recently, IDC and Gartner similarly asserted that PC shipments had grown in Q3 2019 because of the continuing Windows 10 refresh cycle. 

 

 

Rushabh Doshi, research director of Canalys mobility services, told ZDNet that this was confirmed by the latest report: "Microsoft announced that there would be no other Windows iteration, so businesses know that the investment in Windows 10 is safe. There won't be a next generation of OS that will kill the upgrade."  

 

The reported growth, however, paradoxically comes in the midst of an industry-wide CPU shortage crisis caused by Intel. 

 

Since last year, the company has faced a production bottleneck as it struggles to meet demand for its 14nm chips, which supply a wide range of products ranging from mobile devices to servers. It was previously assumed that this would cause headaches for all major PC sellers relying on the chips; but he found that it might actually have the reverse effect. 

 

"For the top five companies at the top - that's Lenovo, HP, Dell, Apple and Acer - this is an opportunity to consolidate their market share," he said.

 

The numbers already reflect that. All five companies have increased their shipments, with Lenovo and HP faring the best, with growths standing respectively at 7.2% and 8.5% year on year.

"Smaller vendors will have less supply and be squeezed out of the market," continued Doshi. "They will become more niche and chase a different market altogether."

 

But Doshi predicts that once tariffs are in place in the US and the Japanese consumer tax is implemented, demand will again go down. 

 

And with the advent of new devices that seem to pack the performance of a laptop in your pocket, it is easy to jump to the conclusion that PCs could soon be a thing of the past. Samsung's Galaxy Fold or Microsoft's Surface Neo, for example, could provide new possibilities in ever-increasing screen sizes.

 

Not so fast, said Doshi. It is true that new form factors can seduce a specific audience, and especially in the mobile industry, with the advent of 5G suggesting that the mobile workforce could increase significantly.

 

"But that market will still be much smaller than the performance PC market," he said. "Something similar happened with the tablet, which then saw demand shrink rapidly. So this is not something that PC vendors should worry about now."

 

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