Global PC sales, which soared during the peak of the pandemic, have been on a steady decline. During the height of the epidemic, sales of PCs, which include laptops and tablets, unexpectedly jumped as millions worked and learned remotely. However, as things started returning to normal and people began going back to their jobs and schools, demand showed signs of fading.
However, there are several other challenges plaguing the industry. The supply-chain problem is one of the biggest among them.
PC Sales Continue to Decline
The COVID-19 epidemic severely impacted a number of industries but allowed some to reap significant rewards. The PC industry was one that profited the most. However, the situation has changed since then, with sales declining almost every quarter.
Global PC shipments totaled 65.3 million units in the fourth quarter of 2022, down 28.5% on a year-over-year basis, according to the latest from Gartner. This is also the largest quarterly decline since the firm started tracking the PC market in the 1990s.
Overall global PC shipments for 2022 totaled 286.2 million units, declining 16.2% from 2021.
Also, for the global market, this is the third consecutive quarter of double-digit decline. According to the report, the PC market has been hit by the fears of a global recession, rising inflation and increasing interest rates.
According to the report, the PC market is currently experiencing a bottleneck due to higher inventory levels that began to accumulate in the first half of 2022. High demand and supply chain interruptions until 2021 resulted in low PC supply, which was swiftly transformed into an excess of supply after demand dropped quickly and drastically.
Challenges Aplenty
With the steep decline in PC shipments, the market leaders appear to be the biggest sufferers. Although their rankings as market leaders haven’t changed, the top three PC manufacturers have also suffered the greatest losses over this time.
Lenovo Group Limited LNVGY, continues to dominate the top spot with a market share of 24%. However, LNVGY recorded its steepest quarterly decline since the mid-1990s. This was also the fifth consecutive quarter of sales decline for Lenovo Group Limited.
Also, HP Inc. HPQ and Dell Technologies Inc DELL witnessed sharp quarterly declines. HPQ suffered the most in the EMEA market, with shipments plummeting 44% on a year-over-year basis in the fourth quarter of 2022. However, HP Inc. now holds the biggest market share of 26.8% in terms of shipments in the United States.
Dell Technologies also held its position as the third-biggest player. However, DELL’s business was affected in the fourth quarter by sluggish demand in the large business market. Dell Technologies now has the second largest market share in the United States with 23.4%, but slowing sales have been impacting its business.
Apple, Inc. AAPL is the only exception among the top players. AAPL saw a 3.6% jump in shipments in the fourth quarter on a year-over-year basis. This follows a 7% jump in the third quarter and a 9.3% jump in the second quarter. Apple currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The US PC market, one of the biggest markets, plummeted 20.5% in the fourth quarter of 2022, recording its sixth straight quarterly decline. The US PC market as a whole is suffering from slowing laptop sales. However, demand for desktops has slightly increased.
The industry is facing a spate of challenges, with price being the biggest concern. Americans have cut back on expensive items as a result of soaring inflation. The supply-chain issue began to ease in the third quarter, but excessive inventory levels are now causing new worries as demand continues to decline in both the consumer and commercial markets.
Also, sales of semiconductors are increasingly being affected by the decline in PC demand. A number of chip manufacturers have claimed that lower PC demand is having an effect on their sales. Overall, 2022 was a difficult year for the PC market, and experts don’t expect things to get better until the second half of 2023.
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