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Transparency and flexibility best ways to approach PC supply woes

Canalys has revealed that vendors that were open with partners about supply constraints and had options for resellers have fared well in Q1

Vendors that were transparent with the channel and customers over shortages and encouraged flexibility were well-placed to benefit in the PC market during the first quarter (Q1).

The component shortages that have been plaguing the hardware industry for the past 18 months are well-known, but continue to be a thorn in the side of those keen to meet the demand for hardware to support remote workers and those heading back into their offices.

An analysis of Q1 PC shipment numbers across Western Europe from Canalys indicated that there was strong growth in the market, with desktops, notebooks and workstations hitting 16.1 million units, a 48% year-on-year (YoY) improvement.

On the vendor front, there will be celebrations over at HP, with the vendor regaining top spot from Lenovo by shipping 4.1 million units and 26% market share, with its closest rival having 4 million units and 25% share. Dell, Apple and Acer fill out the rest of the top five, with 14%, 10% and 9% shares respectively.

“While demand remains sky high, the question is can supply cope? Right now, the vendors that can fulfil orders the quickest will win,” said Canalys research analyst Trang Pham.

“In Q1, several PC distributors and resellers reported strong supply of HP devices, especially for AMD models. And in cases where shipment delays were inevitable, HP managed its channel well, being transparent about shipment timings and giving assurances to customers, which discouraged them from seeking alternatives,” she said.

“Lenovo also had an exceptional quarter, with particular success in Chromebook sales as Google continues to spend big to push its platform with enterprise customers. Its new manufacturing facility in Hungary will also speed up order fulfilment in Europe,” she added.

As well as the shortages situation, the analyst house is also keeping a close eye on the effect of the coronavirus vaccines and the potential impact on PC demand. In Q1, there were no major signs that the availability of jabs had significantly improved business, with uncertainty around third waves and restriction-lifting timetables continuing to have an impact.

“The picture is certainly improving, but we are not out of the woods yet,” said Canalys research manager Ben Stanton. “As vaccinations progress, restrictions have started to ease, which will pave the way for economic recovery.

“The world that emerges will not be the same as the one we left behind. Digital transformation has accelerated, apps and workloads are increasingly cloud-based, and employees will now expect remote and hybrid working options. It is extremely unlikely that PC supply will match this sustained demand surge over the next 12 months. If a vendor can supply, the product will fly,” he said.

Supply problems, particularly with semiconductors, were the one major problem that Dell indicated it was dealing with in its Q1 chat with analysts last week. That issue combined with some uncertainty around the speed of Covid-19 recovery across the globe meant that the firm reduced Q2 revenue guidance.

“For Q2, our normal sequential revenue increase is about 6%. We are seeing progress on the economic front, but given ongoing supply constraints particularly affecting Client Systems Group as well as VMware’s standalone guidance, we expect Q2 revenue to be slightly below our normal sequential pattern over the past few years,” said Tom Sweet, CFO at Dell.

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