According to the latest IDC report, the decline in PC shipments is expected to moderate, helped by increased spending in mature markets as a result of system refreshes and enterprise system migrations beyond Microsoft's (MSFT) XP operating system. Also, the demand for Chromebooks is on the rise in these markets which is expected to cushion the decline in PCs. Nonetheless, PC shipments in the emerging markets continue to be impacted by consumers’ preference for tablets and mobile devices.
Buoyed by a forecasted 5.6% growth in PC shipments (140.7 million) in the mature markets, IDC now expects global PC shipments (303.5 million) to decline 3.7% in 2014, a marked improvement from its earlier forecast of a 6% decline. PC shipments in emerging markets (162.7 million) are however expected to be down 10.5% in 2014.
IDC has also stated that PC market cannibalization by tablets is weakening. The reduction of PC prices by vendors is turning out to be an offsetting factor.
Additionally, IDC expects PC shipment declines to moderate further to just 2.3% in 2015 backed by the extension of PC replacement cycles and the scheduled launch of Windows 9.
It is worth noting that the optimism expressed by IDC was reflected in some of the results declared by the companies such as Hewlett-Packard (HPQ), Intel (INTC) and Microsoft that are directly related to the PC industry. Apart from this, companies in allied industries, such as IT security service provider Symantec Corp. (SYMC), have seen an improvement in the market.
H-P reported top-line growth in the third quarter after 11 consecutive quarterly declines. Revenues improved primarily due to higher sales in the PC segment.
Also, the company witnessed growth in commercial revenues driven by strong demand for commercial desktops and notebooks. The ongoing upgrade of H-P’s installed base and the expiration of the Windows XP operating system also aided segmental revenues. The consumer segment was aided by higher sales in its Americas and EMEA regions, which offset the soft demand in Russia and China.
Intel also reported higher unit volumes, both sequentially and year over year, driven by the improving economic environment, PC refreshes in the enterprise and SMB segments, Windows XP end-of-life and the growing number of form factors that Intel currently caters to. This, in turn, aided the company’s top-line performance.
Coming to Microsoft, Windows OEM revenues grew at a much slower rate of 3% as the 11% OEM Pro revenue growth was largely offset by a 9% decline in OEM non-Pro. Both OEM Pro and consumer licensing benefited from the withdrawal of XP support.
The current phase of system upgrades and PC refresh cycles remains the near-term catalysts for the industry. From a long-term perspective, PCs have to slog it out with other computing devices currently available, as returning to growth remains a distant possibility.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment