Weak demand, inventory challenges, and cautious spending impact PC industry
Preliminary results from the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker reveal that global PC shipments declined by 13.4 per cent year over year during the second quarter of 2023 (2Q23). This marks the sixth consecutive quarter of contraction for the PC market, driven by macroeconomic headwinds, weak demand from consumers and businesses, and a shift in IT budgets away from device purchases. However, despite the challenges, the market performed better than initially forecasted for the quarter.
The overall weak demand has led to elevated inventory levels, which have remained above normal for longer than anticipated. This includes finished systems at the channel level as well as in the supply chain. No PC maker has been immune to the difficulties faced by the market, except for Apple and HP Inc. While leading companies experienced double-digit declines in shipments, Apple benefited from a favorable year-over-year comparison as it dealt with supply issues during 2Q22 due to COVID-related shutdowns in the supply chain. HP, on the other hand, has been grappling with oversupply in the past year but is now approaching normalized inventory levels, allowing it to showcase growth during this downturn.
Jitesh Ubrani, research manager for IDC’s Mobility and Consumer Device Trackers, highlighted the impact of elevated channel and component inventory on the market. He stated, “And despite these issues slowly easing, many component suppliers continue to offer reduced pricing in an effort to clear their inventory, though PC makers and channels remain cautious about new systems due to reduced demand.”
Ryan Reith, group vice president for IDC’s Client Device Trackers, discussed the challenges faced by the PC industry in recent years. He mentioned the hesitancy of companies to be caught with short supply as experienced in 2020 and 2021, but noted their reluctance to make significant investments in anticipation of a market rebound. Reith also highlighted the shift in consumer habits, where computing needs are shared across multiple devices, with smartphones becoming a favored choice over PCs. On the commercial side, workforce reductions in larger companies and the introduction of generative AI contribute to the uncertainty surrounding budget allocation.
The PC industry continues to navigate the complexities of supply and demand dynamics, along with evolving consumer and commercial preferences. While challenges persist, the market’s performance in 2Q23 indicates a slightly better outcome than anticipated. PC makers and channels remain cautious as they navigate inventory challenges and adjust to changing market dynamics.