PC market shifting to higher ASP models

The move by customers to get ahead of hardware price rises, driven by component shortages, is continuing to be seen in sales across Europe.

Context, which gets figures from distributors, has tracked the market and identified a shift towards sales of higher-value notebooks.

“After a strong first quarter where unit and revenue growth was fuelled by channel stocking ahead of anticipated price hikes, the dynamic shifted sharply at the start of Q2”, said Marie-Christine Pygott, senior analyst at Context.

“Unit volumes dropped following that period of intense stocking, but revenues continued to climb, albeit at a more moderate pace, driven by a significant rise in average selling prices and a market shift toward higher-end devices.”

The first six weeks of Q2 saw notebook revenues going through European disties increase by 12% year on year (YoY), with desktops declining by 2% during the same period. Notebook unit sales dropped by 3% and desktops were down by 7%.

The growth in notebook revenues comes after a strong Q1, which saw a 15% rise in revenues. The momentum appears to have stalled on the desktop side, dropping substantially from the 20% revenue growth experienced in the first quarter.

The channel is benefitting from higher application service providers (ASPs), which are up by 1.4% YoY for notebooks in early Q2 and by 10.5% for desktops.

Context’s latest market analysis also underlined the fundamental role distribution plays as the main route to market for PCs. It commanded a 38% share of business PC sales in the UK market, with similar levels in France and Germany.

“Distribution remains the critical engine of the European PC market, especially within the business segment where partners continue to rely heavily on broad availability, financing options and fast fulfilment,” said Pygott.

Speaking back in March, Pygott said that although the PC market looked strong on the surface, the dynamics underneath were being driven by a lot of pull-forward due to customers looking to get ahead of price rises.

The shift towards higher-spec PCs was a theme in HP’s second-quarter results, which were shared earlier this week.

Bruce Dale Broussard, HP’s interim chief executive officer, told investors on an earnings call that there was increasing demand for AI-capable devices.

“In personal systems, revenue grew 13% YoY, with strong growth in both commercial and consumer. This includes continued momentum in AIPCs, which increased from more than 35% to 44% of our shipment mix in the quarter. As well as continued strength in advanced compute solutions and workforce solutions.,” he said.

“While remaining focused on disciplined execution In Q2, as anticipated, memory and storage cost increased sequentially. We expect this trend to continue in the second half of 2026, with cost increasing in Q3 and Q4,” he added.

He indicated that there was no sign of respite coming this year and the industry was juggling several challenges: “Looking ahead, we expect the memory and storage environment to remain constrained. In addition, we also anticipate broader inflationary pressures beyond memory and storage, including oil prices and their downstream effects. To help mitigate these headwinds, we will continue to leverage the operational capabilities and discipline we strengthened in Q2.”