The PC market has been on the decline for the past year, but there are new hints that the situation is improving — if only slightly. Both Gartner (shown here) and IDC estimate that worldwide computer shipments dropped roughly eight percent year-over-year in the third quarter. While that’s not exactly comforting to vendors, it’s better than the double-digit losses of the past several months; the analyst groups even saw flat or positive growth in countries like Japan and the US. Any further declines in some regions may be relatively gentle, Gartner says.
As for who’s out in front?
Heavyweights like Lenovo, HP and Dell grew thanks to improving business sales and some advance shipments of Windows 8.1 PCs. Acer and ASUS, meanwhile, were dealt the worst blow as their netbook sales continued to suffer from the rise of mobile OS tablets. Neither Gartner nor IDC is predicting a turnaround for the industry, but they suggest that PC builders are finally figuring out their places in a world where mobile devices rule.
Not only PC, but MAC also
Another interesting piece of data we glean in the report is that Apple (AAPL) experienced a PC shipment decline of 11.2% in the third quarter. Perhaps, iPhone and iPad are cannibalizing MAC sales. It’s something to watch in the upcoming quarterly results. Smartphones and tablets have compressed the tech giant’s margins, falling Mac sales might further the problem; although management recent said margins will be higher thanks to iPhone 5S sales. Nobody actually wants the 5C as its price has been cut by many vendors already.
The way of the VHS
The PC is going the way of the VHS. Investors would be better served focusing on tablet leaders and suppliers. Even smartphone sales are beginning to moderate.
- PC shipments fall for sixth straight quarter (nbcnews.com)
- The PC Industry Shrank Another 9%, Gartner Says (AAPL, HPQ) (businessinsider.com)
- The PC Industry Shrank Another 9%, Gartner Says (AAPL, HPQ) (embargozone.com)
- IDC and Gartner: Q3 2013 PC shipments not as bad as predicted, but still bad (neowin.net)
- PC sales continue to fall as smartphones, tablets cut demand (ctvnews.ca)
Despite my early optimism for Windows 8 and its potential for interesting laptop-tablet hybrids, I must make a confession: I haven’t gotten around to buying one yet.
It’s not because I lack the funds or the knowledge of what’s available. For the right machine, I’d be willing to spend $1,000 or more --it would serve the purpose of two devices, after all--and I’ve tested a handful of PCs that fall roughly within that range.
- Windows 8.1 'Transfer Settings' Screenshot Leaked (microsoft-news.com)
- The ASUS Transformer Book Trio: Atom + Haswell, Android + Windows 8 (anandtech.com)
- Big surprise: Bill Gates thinks Windows 8 is great (reviews.cnet.com)
- Asus unveils Transformer Book Trio -- a Windows 8 and Android hybrid (betanews.com)
The chart at right represents the worst case scenario for Apple’s share of the global SmartPhone market.
Using Apple’s own numbers for fiscal Q2, we calculate that iPhone sales grew 7% year over year in a sell-in basis while the overall smartphone market grew by about 36%. The net result is that Apple’s share of the global smartphone market fell from 23% last year to 17% share this year — the largest year-over-year decline in the iPhone’s history.
The situation won’t get any better by June. Based on Apple’s fiscal Q3 revenue guidance, we estimate Apple will sell about 25 million iPhones in the current quarter. If the overall market grows 30%, Apple’s share will fall to 12.3%. If it grows 36%, Apple’s share falls to 11.7%.
Given this, how can be maintained a $600 price target for Apple and an Outperform rating?
- Apple’s market share typically troughs before new offerings… Apple’s share could increase dramatically with the introduction of a lower priced device, and meaningfully with the addition of new carriers. We estimate that adding China Mobile would boost Apple’s global smartphone market share by over 100 bps in the first year, and that a successful low end iPhone could boost share by 500 bps or more.
- iPhone is still growing healthily. As gloomy as these market share forecasts appear, we model iPhone unit sales growing 15% in FY 2013, and 10% in FY14, and our model does not include the introduction of a lower-priced device. Yes, Apple is growing at a fraction of the market – because it is not participating in the fastest growing, low end segment – but we still expect it to grow.
- The size of the total iOS ecosystem remains staggering on both an absolute and relative basis – and Apple’s customer base remains intensely loyal. In short, iOS is in no risk of going away… Moreover, our consumer surveys point to iPhone repurchase intentions of over 90%, notably ahead of competing ecosystems, including Android.
- Market share does not necessarily correlate with profitability. Currently, Apple’s iPhone positioning is increasingly mirroring the Mac, which commands just 5% PC market share, but is highly profitable, accounting for an estimated 40% of total PC industry profits.
- Philip Elmer-DeWitt: Analyst: Apple’s smartphone share in single digits by Sept. (tech.fortune.cnn.com)
- CHART OF THE DAY: The iPhone’s Market Share Is Dead In The Water (AAPL, GOOG, MSFT, GOOG) (businessinsider.com)
- Analyst: Apple’s smartphone share in single digits by Sept. (forums.pinstack.com)
- Analyst: Apple’s Smartphone Share Could Drop to 9% by Q3 2013 [Chart] (iClarified.com)
- IDC on Smartphones in Q1: Android Dominant , WP up , iOS down (techysants.wordpress.com)
- Verizon iPhone First Take (reviews.cnet.com)
- What does the iPhone 5 mean to Android? Not a lot (reviews.cnet.com)