PC market struggles under tablet pressure

THE PC MARKET is struggling to grow in the face of expanding tablet demand, while Lenovo has overtaken Dell to become the second largest PC vendor in the world, according to a report by International Data Corporation (IDC).

IDC found that worldwide PC shipments were up by 3.6 per cent in the third quarter, an increase on the 2.7 per cent growth in the previous quarter, but short of the expected growth of 4.5 per cent predicted in August.

Both the Europe, Middle East, and Africa (EMEA) and the Americas markets reported slower growth than expected, with the US market effectively flat, while weak consumer demand and economic turmoil in Europe lead to a slowdown in PC shipments there. A lot of regions, Europe in particular, are suffering low demand as cash-strapped consumers opt to buy tablet computers instead of a new PC.

Asian markets grew faster than expected, however, helping to offset some of the poor performance in other regions. Japan saw low single-digit growth, despite power rationing after the earthquake and tsunami earlier this year, and the Asia-Pacific region excluding Japan saw double-digit growth, thanks to strong demand in China, India, Indonesia and Thailand.

HP remains in top position with an 18.1 per cent market share, an increase from its 17.8 per cent market share in the same period last year. It also shipped 5.3 per cent more PCs, with 16.7 million units in the third quarter, up from 15.8 million in Q3 2010.

Lenovo crept into second position thanks to astounding growth of 36.1 per cent, which bumped up its PC shipment figures from 9.2 million units to 12.6 million for the third quarter. It also saw a corresponding increase in market share from 10.4 per cent to 13.7 per cent.

Dell dropped to third position, with a decline of 1.6 per cent in shipments, down from 11.2 million units to just over 11 million. Its market share also declined from 12.6 per cent to 12 per cent.

The biggest loser, however, was Acer, which saw a decline of 20.6 per cent as its shipments dropped from 11.6 million units to 9.2 million. Its market share also fell from 13.1 per cent to 10 per cent.

Lenovo's growth is reassuring for many in the PC market, showing that there's still a lot of potential in the industry. If HP axes its PC business altogether or sells it to a smaller vendor, or even Lenovo itself, then Lenovo could easily reach the top position. It might not even need such a drastic market change if its rate of growth continues at its current pace.

"Most vendors continue to struggle with the slow market environment and product changes," said Loren Loverde, VP of Worldwide Consumer Device Trackers at IDC. "Although we don't see media tablets and other devices replacing PCs, questions on how products will evolve, and consumer interest in these and other categories are providing a distraction. And while price remains critical, many users are delaying PC purchases for the moment. Still, there are opportunities, as demonstrated by Lenovo's gains, and we expect PCs to find stronger demand in the coming years." µ