Despite PC Market Consolidation, Buyers Still Have Plenty of Options

The traditional PC market’s long-term decline gets plenty of press, but one of the other less-talked-about trends occurring inside the market’s slide is the massive share consolidation among a handful of players. A typical side effect of this type of market transformation is fewer options for buyers, as larger brands swallow up smaller ones or force them out of business. While this has certainly occurred, we’ve seen another interesting phenomenon appear to help offset this: New players entering into this mature market.

Top-Five Market Consolidation
The traditional PC market consists of desktops, notebooks, and workstations. Back in 2000, the market shipped 139 million units worldwide, and the top five vendors constituted less than 40% of the total market. That top five included Compaq, Dell, HP, IBM, and NEC. Fast forward to 2010, near the height of the PC market, and units have grown to about 358 million units worldwide for the year. The top five vendors are HP, Dell, Acer, Lenovo, and Toshiba, and they represented 57% of the market. Skip ahead to 2017, and the worldwide market has declined to about 260 million units. The top five now represent about 74% of the total market and is made up of HP, Lenovo, Dell, Apple, and Acer.

Market consolidation in mature markets such as Japan, Western Europe, Canada, and the United States has been even more pronounced. In 2017 the top five vendors in Japan represented 77% of shipments; in Western Europe, it was 79%; in Canada, it was 83%, and in the U.S. it was 89%. Markets traditionally considered emerging, however, weren’t far behind. In the Asia Pacific (excluding Japan), the top five captured 69% of the market in 2017; in Latin American, it was 71%, and in Central and Eastern Europe plus the Middle East and Africa it was 76%.

Category Concentration
If we drill down into the individual device categories at the worldwide level, we can see that desktops remain the area of the market with the least amount of share concentration among the top five in a given year. In 2000 the top five represented 38% of the market; in 2010 it was 46%, and in 2017 it was 61%. Desktops continue to be where smaller players, including regional system integrators and value-added retailers, can often still compete with the larger players. In notebooks, the consolidation has been much more pronounced. In 2000 the top five represented 57% of the market; in 2010 it was 67%, and in 2017 it was 82%. Interestingly, in the workstation market-which grew from 900,000 units in 2000 to 4.4 million in 2017-the top five have always been dominant with a greater than 99% market share in each period.

Another trend inside each category that’s viewable at each year is the evolution of average selling prices. At a worldwide level, the average selling price of a notebook in 2000 was $2,176; in 2010 it declined to $739, and by 2017 it increased to $755. During those same time periods, the desktop went from $1,074 to $532, to $556. Workstations were the only ASP that continued to decline, dropping from $3,862 to $2,054 to $1,879. I’d argue consolidation itself has played a relatively minor role is the ASP increases in notebooks and desktops, as competition in the market remains fierce. The larger reason for these increases is that both companies and consumers now know that they plan to hold on to their PCs longer than they have in the past, and as a result, they’re buying up to get better quality and higher specifications.

New Entrants in the Market
All of this market consolidation might lead you to believe that today’s PC buyers have fewer choices than they did in the past. And this is true, to some extent. A consumer browsing the aisles at their local big box store or an IT buyer scanning their online options will undoubtedly notice that many of the vendors they purchased in the past are no longer available. But the interesting thing is that there are a handful of new players that have moved in, and many are putting out very good products.

There’s Google’s own Pixelbook, which demonstrates just how good the Chromebook platform can be. Microsoft continues to grow its product line, now offering notebooks and desktops in addition to its Surface detachable line, showcasing the best of Windows 10. And there is the mobile phone vendors such as Xiaomi and Huawei, each offering notebook products, with the latter in particular fielding a very good high-end product. It’s also notable that none of these vendors has targeted the high-volume, low margin area of the market. All are shipping primarily mid to high-end products in relatively low volumes.

As a result, none of these newer entrants have come close to cracking the top five in terms of shipments in the traditional PC market. But I’d argue that their presence has helped keep existing vendors motivated and has increased competition. As a result, I’d also say that the top five vendors are producing some of their best hardware in years.

As the traditional PC market decline slows and eventually stabilizes (the first quarter of 2018 was flat year over year), competition will intensify, and consolidation is likely to continue. It will be interesting to see how these newer vendors compete to grow their share, and how the old guard will fight to gobble up even more, utilizing their massive economies of scale. Regardless, the result will be a boon for buyers-especially those in the growing premium end of the market-who should continue to have plenty of good hardware options from which to choose.