After years of expansion, numerous acquisitions and other actions, Lenovo Group has managed to become the world's second largest supplier of personal computers in the world. Thanks to rapid growth in all markets, Lenovo now commands around 13.5% of the market that is slowing down due to economic turmoil, according to leading PC market tracking companies Gartner and IDC.
Worldwide PC Market Total 91.8 Million
Worldwide PC shipments totaled 91.8 million units in the Q3 2011, a 3.2% increase from the Q3 2010, according to preliminary results by Gartner. These results are slightly lower than Gartner's earlier projection of 5.1% growth for the quarter. The EMEA region contributed to lower-than-expected growth led by a weak Western European market.
"The inventory buildup, which slowed growth the last four quarters, mostly cleared out during the third quarter of this year; however, the PC industry has been performing below normal seasonality. As expected, back-to-school PC sales were disappointing in mature markets. The popularity of non-PC devices, including media tablets, such as the iPad and smartphones, took consumers' spending away from PCs," said Mikako Kitagawa, principal analyst at Gartner.
HP, the No. 1 vendor based on global PC shipments, grew faster than the industry average, and its market share reached 17.7% in the third quarter of 2011. Despite announcing in the middle of Q2 2011 the potential spinoff of its PC business, HP experienced strong growth in the U.S., while outside the U.S., growth was relatively weak or average.
Lenovo became the second-largest PC vendor in the worldwide market for the first time. The company's expansion was boosted in part by the joint vendor with NEC in Japan. However, its aggressive marketing to both the professional and consumer PC markets accelerated its shipment volume, according to Gartner.
Dell's performance was below the industry average in most regions, as the company faced intensified competition in the professional space, where Dell has been traditionally strong, according to Gartner. Nonetheless, Dell's expansion efforts in China continued to pay dividends, maintaining double-digit growth in Asia/Pacific (excluding Japan), IDC claims.
Acer continued to struggle with inventory clearing and adjusting its strategy following declines in netbooks and its management shake-up, said Gartner. Total shipments were down 20.6% from a year ago – the fourth consecutive quarterly decline – but easier comparisons may help the company turn a corner in coming quarters.
Asustek Computer had a strong quarter, boosting growth to over 30%, said IDC. Strong gains in Asia/Pacific, along with improvements in EMEA, helped Asus overtake Toshiba for the number 5 spot in worldwide shipments. While the vendor has had some difficulties adjusting for the decline in netbook PCs, its mainstream notebooks have done well, especially in emerging markets.
Total shipments of Apple increased more than 20% in Q3 2011, recovering from a dip to 15% growth in the second quarter but otherwise continuing a trend of more than 2 years with over 20% growth. The MacBook Air continues to boost volumes, and Apple's position in driving changes in consumer expectations for devices also positions it favorably relative to other players and tight consumer spending, according to IDC.
EMEA PC Market Remains Weak
In an uncertain environment, quarter-on-quarter growth provides a better indication of the dynamics of the EMEA PC market. The EMEA PC market exhibited growth of 17.1% from the second quarter of 2011.
"The PC market in EMEA remained weak in the third quarter of 2011, due to slow consumer demand and lower sell-in to the channel. As a result, the market recorded its third consecutive quarterly decline," said Ranjit Atwal, research director at Gartner.
In the third quarter of 2011, HP regained the No. 1 position from Acer and grew its market share by 1.1% points year-on-year. HP managed the impact of separating its PC division better than we had expected.
Acer pulled down the market average as it continued to suffer inventory issues. Over the first three quarters of 2011, the EMEA PC market declined 4%, compared with the same period in 2010. Most of the decline resulted from the continued poor performance of Acer, which declined more than 30%. The prolonged inventory clearance will have a permanent impact on Acer, as its direct competitors are securing new channel and retailer partners
Asus's shipments grew sharply, with increased sales of mobile PCs in both the consumer market and the small and midsize business market. It moved up to third place, overtaking Dell.
Lenovo performed strongly in both the professional and consumer markets. It took advantage of HP’s strategic issues and Dell’s inability to match Lenovo's prices in the professional market.
Many PC vendors were banking on media tablets to boost their growth in the second half of 2011, but given the collapse of the non-Apple part of the media tablet market, most have refocused on getting PCs into retailers. However, retailers remain cautious about demand and have shortened their order lead times. This passes more cost on to the PC vendors at a time when margins are under pressure.
U.S. PC Market Grows by 1.1%
In the U.S., PC shipments totaled 17.8 million units in the third quarter of 2011, a 1.1% increase from the third quarter of 2010. The U.S. PC market experienced year-over-year growth for the first time in three quarters. While the consumer market continued to be weak with disappointing back-to-school sales in the third quarter, the inventory was kept mostly in check as industry expectations were relatively low.
"The main contributor to the weak consumer PC market in the U.S. was intensified competition for consumers' money. Media tablets and smartphones took center stage in the U.S. retail sector, and the expectation is for continuing demand for these devices throughout the holiday season," said Ms. Kitagawa.
HP showed strong growth in the U.S. PC market, as shipments increased 15.1% in the third quarter, and its market share totaled 28.9% (see Table 2). Despite the potential spinoff of its PC business, HP executives' efforts to give the appearance of "business as usual" seemed to work in the quarter.
Dell struggled as shipments declined 7.2% in the third quarter of 2011.
"Dell's issue has been balancing profitability and market share gain, a difficult task in a PC industry where high volumes and low margins are the norm," Ms. Kitagawa said.
Gartner's early study shows that Apple experienced the strongest growth among the top five vendors in the U.S. PC market. Apple's PC shipments increased 21.5% in the third quarter of 2011. The robust growth of the MacBook Air continued to lead Apple's overall growth in the U.S. market.
APAC, Japan and Latin America Continue to Grow
In Asia/Pacific, PC shipments reached 31.8 million units in the third quarter of 2011, a 6% increase from the same period last year. Vendors continued to stimulate demand aggressively with promotions and prices, benefiting buyers looking for good prices. It also provided an opportunity for some consumers to buy their first mobile PC.
The PC market in Latin America grew 19.6% in the third quarter of 2011. Mobile PC shipments grew 31.1% year over year, and desk-based PC shipments increased 6.5% in the third quarter of 2011.
PC shipments in Japan grew 3%, with shipments reaching 3.9 million units. The consumer market received a boost in demand with the introduction by vendors of new consumer models in September. There was also a rebound in production for the professional market, after a drop in enterprise demand because of the higher prioritization for business continuity plans that coincided with the earthquake and tsunami in March.
"For the moment, PCs have taken a backseat to a range of other devices competing for shrinking consumer and business budgets. While growth is expected to stay in mid-single digits in the fourth quarter, we should see faster growth in 2012 and beyond based on easier comparisons and refreshed PC offerings as the industry better addresses the evolving usage models by integrating more of the features in ultra mobile devices," concluded Jay Chou, senior research analyst with IDC's worldwide quarterly PC tracker.