U.S. PC market shows some resilience amid continuing decline

The PC market shrunk during the first part of 2009, but not as badly as expected.

Shipments of PCs during the first quarter were down 7.1 percent from a year ago, to 63.5 million units, according to IDC, which released its Worldwide Quarterly PC Tracker on Wednesday. That's an improvement from the 8.2 percent decline that IDC had projected.

It's a "good sign" for PCs, said Loren Loverde, the program director for the PC Tracker at IDC. Loverde says the better-than-expected results were aided by falling prices of PCs and more new PC buyers around the world.

It's telling of the depth of fear the economy is stirring up when these numbers are considered a positive sign, especially when placed in context: a continually volatile world economy, accompanying high rates of unemployment, and companies that continue to hold off on technology spending.

But it's not the only sign that things might be turning around for technology companies. Intel CEO Paul Otellini was surprisingly bullish on the market for PCs Tuesday during his company's earnings call, saying, "We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns...I believe the worst is now behind us from an inventory correction and demand level adjustment perspective."

It may not be totally behind us: IDC is predicting roughly 8 percent declines in growth for the second quarter. But there are several things to consider. Though consumer confidence is low, there are increasingly more PCs with lower prices to match available. Low-cost portables, like Netbooks, continue to be the bright spot for many PC makers, especially Acer and Asus, and helped to stem the overall decline worldwide.

And some regions are faring better than others. In the U.S., considered a saturated market for PCs, declines were kept to just 3 percent. Last month, Dell founder and CEO Michael Dell told an audience during a speech in China that the worldwide demand for PCs was "steady," and echoed IDC's assessment of U.S. consumers' continuing appetite. But of the top five PC vendors in the U.S., only Dell and Apple saw overall shipment declines when compared to the same quarter a year ago. Apple dipped slightly at 1.2 percent, but Dell's drop was more drastic at 16.2 percent.

"The U.S. PC market proved to be surprisingly resilient this quarter as notebooks were still seen as important purchases by many U.S. consumers," said Bob O'Donnell, vice president of clients and displays research for IDC in the report. And the gap between the world's largest PC maker, Hewlett-Packard, and the rest of the field is growing. HP actually saw its overall shipments increase and finally overtook Dell as the leading PC vendor in the U.S.

HP's shipments outside the U.S. increased 2.9 percent, but its shipments to U.S. retailers and consumers was up 12.2 percent. Dell's shipments worldwide declined 16.7 percent worldwide, and 16.2 percent here in the U.S. Though the Texas-based PC maker has done a lot of work to improve its business over the past two years, the first quarter of 2009 was particularly difficult for the company.

"Dell is still largely a commercial company," said Loverde. Less than 30 percent of its sales come from consumer PCs worldwide and the most growth in the market is coming in the consumer category, like Netbooks, and Dell hasn't been as aggressive as the likes of Asus and Acer there, he noted. "But I think we have a combination of Dell tentatively going after this growth segment combined with the challenge of executing with channel partners in a really volatile environment. Obviously the economic crisis is affecting products and consumer demand."

The top five PC makers worldwide stayed basically the same: HP holding 20.5 percent of the market, followed by Dell (13.6 percent), Acer (11.6 percent), Lenovo (7 percent), and Toshiba (5.4 percent), according to IDC's numbers.

In the U.S. only, HP led with a 27.6 percent share, just beating out Dell's 25.3 percent, followed by Acer at 10.5 percent, Apple at 7.6 percent, and Toshiba at 6.6 percent.

[mbenedict]

HP's performance is amazing. Of course you'd hardly know it reading CNET, since if it's not Apple it doesn't get much coverage.

But right now, everyone bows down to Acer, king of netbooks. (Or shall we say, 10 million netbooks.)

[Seaspray0]

Maybe that's because the fanboys of 7.6% feel the need to do 50% of the posts. And who would have thought... Acer as the king of netbooks.

[Apolune]

"Not as bad as expected" is the new "resilient?" Way to swallow the doublespeak, Cnet.

[gybognarjr]

Netbooks must be separated from PC sales, otherwise the statistics are misleading and untrue. Therefore this entire premise about PC sales are down less than expected is totally false.

[monkeyfun14]

A netbook is a PC it runs Windows well most of them.

[sflocal]

@monkeyfun14
Exactly how do you come to that conclusion? We purchased a bunch of netbooks for our mobile staff. If one uses it only for the most absolute basic functions (Browsing, email), then a netbook fits the bill just fine.

The moment one tries running any other kind of PC application, a netbook fails miserably. And I'm sure even you know that. I never recommend to people to buy a netbook if their needs go beyond the bare-bone basics and neither should you.

To say a netbook runs Windows well is downright misleading.

And all those netbooks we purchased for our mobile staff? They are sitting on a shelf gathering dust. To no surprise, the sales staff criticized the performance. We ended up getting them real laptops instead.

[monkeyfun14]

@sf

How it performs though doesn't matter most come with 2gb ram and a 1.6ghz processor perfect for XP on a basic level.

Sure its not going to do rendering in real time but its still a pc nonetheless.

[z4dude4]

What about linux?