The worst might be over in the PC market

An analysis of Q2 shipment numbers from Canalys indicates that declines are slowing, and the hoped-for recovery later this year is still on the cards

Those operating in the PC market have been putting their hopes in analyst predictions of a bounce back in the later stages of this year and deeper into 2024.

After a challenging start to the year, there are some signs that the worst might be over, with declines in the worldwide PC market slowing in the second quarter.

The latest research from Canalys has indicated that shipments of desktops and notebooks were down by 11.5% year-on-year in Q2, compared with declines of more than 30% for both the prior quarters.

The second quarter represents a sequential increase in shipments of 11.9%, and is the first major sign that the course of the market is changing.

In terms of vendor rankings for Q2, Lenovo still holds top spot, followed by HP then Dell. The only player to experience year-on-year gains was Apple, which saw a 50.9% improvement in annual growth.

“The PC market is showing early signs of a bounce back following a difficult period,” said Ishan Dutt, principal analyst at Canalys.

“An annual shipment decline was expected in the second quarter of 2023, but there are indications that many of the issues that have affected the sector are beginning to abate,” he said. “While the global macroeconomic situation remains difficult, key industry players have been pointing to the fact that end-user activation rates have been tracking stronger than sell-in shipments. As conditions improve, we expect businesses to reallocate dormant spending back toward IT upgrades. In Q2 2023, the return of public sector funding helped fuel strong back-to-school demand for PCs.”

Inventory levels

Another positive statistic is around inventory levels, with the majority of the channel reporting in June that they were holding up to four weeks’ worth of stock, a much lower level than at the start of the year.

“Positive market signals suggest a further improvement for the PC industry in 2023,” said Kieren Jessop, research analyst at Canalys.

“Inventory levels reduced further in Q2, as 41% of channel partners surveyed by Canalys in June reported that they have less than one week of PC inventory,” he said.

“All customer segments are set to improve sequentially for the remainder of 2023, amid a final push of inventory corrections and stronger seasonality in the latter half of the year. However, full-year 2023 shipments will be lower than 2022 as consumers relegate spending on PCs behind other categories in a post-pandemic environment.”

Other analysts, including Context, have signalled an expected recovery in the PC market in the second half, driven by factors including a shift by users to Windows 11 and the need to refresh devices that were acquired three years ago or more to cope with the pandemic. Hopes also remain that inflation levels might ease and economic conditions improve as a result.

The toll that the PC market declines have taken on the channel could be seen in recent results from TD Synnex, with the distributor blaming poor market conditions for hitting revenues.

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