PC market tumbles with record decline in 2015

Dubai: The PC industry ended 2015 as the first year below 300 million units since 2008 and the year-on-year decline in shipments was the largest in history, surpassing the decline of 9.8 per cent in 2013, with 10.4 per cent decline.

According to research firm International Data Corporation, the PC market continued to face persistent challenges from longer-PC life cycles and competition from mobile phones and tablets, despite the slowing growth in markets.

In 2015, 276.22 million units were shipped compared to 308.36 million in 2014.

However, economic issues like falling commodity prices and weak international currencies, as well as social disruptions in Europe, Middle East and Africa, and Asia/Pacific were a larger factor for 2015.

“The PC market remains competitive and the economic environment weakened further with the recent drop in the Chinese stock market,” said Loren Loverde, IDC Vice-President for Worldwide PC Tracker.

However, he said that PC replacements should pick up again in 2016, particularly later in the year. Commercial adoption of Windows 10 is expected to accelerate, and consumer buying should also stabilise by the second half of the year.

“Most PC users have delayed an upgrade, but can only maintain this for so long before facing security and performance issues. We continue to believe that a majority of these users will purchase another PC, motivated by new products and attractive pricing,” he said.

Changes in the OS market also had a significant impact with the end of support for Windows XP and promotions of low-cost PCs driving a surge in replacements in 2014 that combined with the launch of Windows 10 and a free upgrade program to delay new system purchases in 2015.

Market response

While some very attractive new PCs have been launched, Loverde said the market is taking some time to respond to new OS and hardware configurations — deciding when to upgrade and evaluating slim, convertible, detachable, and touch variations compared to more traditional PCs.

Many of these products have received positive reviews; he said and added that there’s potential for a faster “commercial transition” to Windows 10 in 2016 than we saw for prior versions of Windows.

IDC expects PC replacements to pick up again in 2016, particularly later in the year. Commercial adoption of Windows 10 is expected to accelerate, and consumer buying should also stabilise by the second half of the year.

Despite Windows 10 being a free upgrade, consumer interest for the new Windows 10 hybrid devices seems to be growing, with many expected to make a move to purchase after having skipped one or two generation of devices.

The enterprise also seems like a fertile market, with many companies getting ready to transition to Windows 10 and bolster Microsoft’s adoption rates faster.

As of last week, there were more than 200 million monthly active devices around the world running Windows 10.

Microsoft said that Windows 10 adoption is accelerating, with more than 40 per cent of new Windows 10 devices becoming active since November last year. Windows 10 also continues to be on the fastest growth trajectory of any version of Windows — ever — outpacing Windows 7 by nearly 140 per cent and Windows 8 by nearly 400 per cent.

Education initiatives

Fouad R. Charakla, program manager for personal computing, systems, and infrastructure solutions at International Data Corporation (IDC), said that some PC deals are expected to happen in the latter part of the year in the Middle East and government-driven education initiatives are expected to continue contributing healthily to the growth of the tablet market, particularly in regard to detachable tablets.

The regional PC market is expected to grow by 2.85 per cent to 14.4 million this year compared to 14 million last year.

“Most PC users have delayed an upgrade, but can only maintain this for so long before facing security and performance issues. We continue to believe that a majority of these users will purchase another PC, motivated by new products and attractive pricing,” he said.

Jay Chou, Research Manager at IDC Worldwide PC Tracker, said that consumer sentiment toward PCs remains a challenge, though clearly there are pockets of growth.

Detachable tablets, which are counted separately from PCs, are growing quickly but from a small base.

The impact for 2016 will be larger as detachable tablet volume grows, boosting earlier forecasts of PC growth in 2016 from a 3.1 per cent decline to growth of around 1-2 per cent.