After a significant decline in the first quarter, the PC market rebounded strongly in the second, according to the latest data compiled by two independent research firms — Gartner Inc. IT and International Data Corporation (“IDC”).
Per the preliminary data released by Gartner, PC shipments in the second quarter were up 2.8% year over year to 64.8 million units. The upswing marks a sharp rebound from the first quarter when the research firm had reported that supply-chain disruptions caused by the coronavirus pandemic-induced lockdown resulted in a 12.3% decline in PC sales.
Per the data compiled by IDC, PC sales grew 11.2% year over year to 72.3 million units during the June-end quarter, reflecting a sharp rebound from the first-quarter decline of 9.8%.
Although the firms have reported different figures, both share a similar opinion that the year-over-year improvement was mainly driven by increased demand and improvement in the supply chain.
Computer - Mini computers Industry 5YR % Return
Computer - Mini computers Industry 5YR % Return
Work-and-Learn From Home Fuels PC Demand
Lockdown measures to contain the spread of coronavirus have been stoking demand for PCs. IDC stated that as people are forced to work and learn from home due to the social-distancing restrictions, PC has taken the center stage for consumers’ tech portfolio.
Gartner also has a similar view. The research firm stated that the demand for PCs was driven by several factors, including the need for online education, remote working, and consumers’ entertainment.
Improving Supply Chain
Both research firms blame production and supply-chain disruptions caused by the pandemic-induced lockdown as the main reason behind the PC shipment decline in the March-end quarter. However, according to their second-quarter data, it looks like PC vendors have overcome the supply constraint.
IDC noted that PC production ramped up during the April-June period and even surpassed the previous level in certain areas. As a result, retailers and distributors had ample inventory to accommodate the surge in demand during the second quarter.
Also, Gartner stated that supplies are back to the pre-COVID-19 level. Mikako Kitagawa, research director at Gartner, said, “After the PC supply chain was severely disrupted in early 2020 due to the COVID-19 pandemic, some of the growth this quarter was due to distributors and retail channels restocking their supplies back to near-normal levels.”
Per the data compiled by IDC, all top PC manufacturers witnessed year-over-year increases in shipments. During the second quarter, HP HPQ surpassed Lenovo LNVGY, securing the top vendor position, with a market share of 25%.
Lenovo slipped to the second position, with a market share of 24.1%. Dell Technologies DELL, Apple AAPL and Acer Group hold the next three positions and have a respective market share of 16.6%, 7.7%, and 6.7%.
However, according to Gartner, Lenovo still holds the top spot with a 25% market share, followed by HP’s 24.9%. The next three positions are held by Dell, Apple and Acer Group, with a market share of 16.4%, 6.7%, and 6.2%, respectively.
The Days Ahead
Gartner and IDC have somewhat similar views over the near-term demand scenario. Both firms believe PC demand will be hurt by the pandemic’s economic toll, which is resulting in soaring unemployement levels across the world.
Gartner stated that the second-quarter PC sales were boosted by the urgent necessity for business continuity and online education, thanks to the global lockdown. Therefore, the research firm believes that it was a short-term recovery and will not continue beyond 2020.
Research manager for IDC's Mobile Device Trackers, Jitesh Ubrani, stated that “it remains to be seen if this demand and high level of usage continues during recession and into the post-COVID world since budgets are shrinking while schools and workplaces reopen."
Linn Huang, research vice president, Devices and Displays at IDC noted, "With inventory still back ordered, this goodwill will continue into July. However, as we head deeper into a global recession, the goodwill sentiment will increasingly sour."
All top four PC vendors — Lenovo, HP, Dell and Apple — currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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