IDC’s preliminary PC shipment results for the first quarter of the year showed total volumes down about 3% year over year, which was better than we forecasted for the quarter. Strong overall commercial shipments driven by the ongoing shift to Windows 10, especially in desktops, helped offset sluggish consumer volumes. One notable drag on shipments has been the ongoing shortage of Intel processors, especially on the lower end of the market. While Intel is closing in on a fix to its supply-side issues, we’ve seen a resurgent AMD grab share from the market leader with highly competitive new products. Moreover, Qualcomm continues to iterate on ARM-based Snapdragon processors targeting the PC market. The result is a PC processor market that’s more competitive then it has been in years.
AMD Grows Its Share
AMD’s market share in PCs has risen and fallen over the years based largely on the strength of its current generation of silicon and its ability to get PC vendors to leverage the company as a secondary source to Intel. Today’s AMD is firing on cylinders with competitive products up and down its product stack, and Intel’s well-documented issues around its shift to 10nm—and the resulting supply issues—gave the company the opening it needed. And PC vendors have responded by utilizing AMD chips in an ever-widening number of systems, including commercial-focused ones. This helped AMD increase its market share in 2018, and I expect it to grab even more share in 2019.
At CES, AMD leaned into the opportunity, announcing a range of new mobile chips including Ryzen 3000 processors for ultrathin and gaming notebooks, AMD Athlon 300 Series for mainstream notebooks, and AMD A-Series for Chromebooks. The company’s move to get into Chromebooks, which has already yielded new products from HP and Acer, is of notable importance. Years ago, the first Chromebooks shipped with ARM-based processors. Intel saw the opportunity around Chromebooks and wisely moved to capture that market with its low-end processors.
The result: As Chromebook volumes have surged in the United States, primarily in K-12 Education but more recently in consumer as well, Intel has captured those significant volumes. In 2017 Chrome OS represented 32% of U.S. commercial notebook shipments and in 2018 that grew to 36%. Its share of consumer notebook shipments grew from 11.7% to 12.4% during that same time. It’s notable that despite its supply-side challenges—which specifically hit the low end of its line—Intel made sure the supply of processors for Chromebooks never faltered. Now, as Google and its partners look to expand Chromebooks into other regions, finally dedicating the resources and marketing needed to drive the same type of success they’ve had in the U.S., the opportunity will become even larger. And AMD is there to challenge Intel for a piece of the action.
Qualcomm’s Snapdragon Efforts
I’ve written about Qualcomm’s foray into PCs in the past, and more recently I’ve been using Lenovo’s Snapdragon 850-based Yoga C630 laptop and, frankly, it’s amazing. I travel frequently, and for certain users like myself the ability to be on the move using my PC all day (and frequently days) between charges, is revelatory. I dropped a Verizon SIM into the unit, and I never have to worry about dealing with connecting to my smartphone or a janky WiFi connection point to get my email. Performance is good, not great, but more than adequate for what I need from a mobile system, and Windows compatibility issues have largely disappeared.
There are plenty of people, including many participating in this market, that are highly skeptical of Qualcomm’s ability to compete against Intel and AMD in the PC space. It will continue to be an uphill battle, for sure. Up until now, there’s been very limited PC vendor support. As a result, there aren’t many options in the market for buyers, and from a market-share perspective, Qualcomm hasn’t really registered, yet. In fact, I’d argue that the vast majority of current users are likely tech analysts like myself, tech journalists testing out the systems for review, and die-hard road warriors that have specifically looking for mobile-focused systems.
That may change later this year, however, as Qualcomm launches is next generation PC-focused chip, the Snapdragon 8cx. Qualcomm says this 7nm chip will drive notably better performance than its current chips, and I’m looking forward to testing out systems that utilize it. If I have one concern, it’s that Qualcomm and its partners will over-index on performance at the cost of the power efficiency, which is what makes these systems so special.
I do expect to see more PC vendor support for this chip, resulting in more choices in the market. At which point it will be up to Qualcomm, its hardware partners, and Microsoft to tell a more compelling marketing story. Part of that story will depend upon their ability to get carriers to make it easier and potentially less costly to utilize LTE (and eventually 5G) on these systems.
Intel Isn’t Standing Still
I’ve been in the tech industry a very long time, and I’ve seen Intel struggle in the past. It’s usually during these times when the company does its best work. The supply issues should abate soon; the company says its 10nm process is back on track, and it recently hired interim CEO Bob Swan to fill the role permanently. With regards to PCs, Intel seems to be focusing much of its efforts on the high-performance area, even hiring industry analysts and tech journalists to help tell its story. That said, of late the company also seems to be shifting at least some of its focus toward telling a stronger story about using Intel products in the data center. It’s a logical choice, and Intel would argue it can do both things well. However, it is hard not to see the data center push as a hedge against possible continued share erosion on the PC side of things.
Ultimately, as we often like to say in the tech industry, all this competition is good for the market and PC buyers. Pay close attention to the product mix when we reach the back-to-school season and keep an eye on new products as we head into the holiday season. Things are about to get even more interesting, and by this time next year, we could see a substantially different competitive mix in the market.