Strong 2Q Demonstrate PC’s Continued Importance
The early view of shipment volumes for the traditional PC market is in for the second quarter, and they are quite good. While COVID-19 caused companies, schools, and communities worldwide to lockdown during the quarter, demand for PCs went through the roof, growing by 11.2% year over year, according to IDC’s preliminary numbers for the quarter. Further proof that the PC remains not just relevant, but hugely important to businesses, students, and consumers.
While we are still early in the process of processing the data, one thing seems clear: All the major vendors grew their shipments of traditional PCs (notebooks, desktop, and workstations) during the quarter. Apple, Acer, and HP all enjoyed double-digit year-over-year growth, and HP’s more than 18 million units placed it at the top with a market share of 25%. Lenovo was right behind, followed by Dell, Apple, and Acer. Early in the quarter, we saw HP placing large notebook orders with ODMs, a seemingly risky bet during uncertain times that clearly paid off for the company.
Around the world, as communities headed into lockdown, purchases of PCs—specifically notebooks—ramped up dramatically. Across the market, we saw vendors working throughout the quarter to try to replenish channels that sold out of stock as companies rushed to outfit workers shifting to work from home, schools scrambled to equip students to learn from home, and consumers grabbed up PCs to make their shelter-at-home quarantines more bearable.
We saw some supply-chain challenges carry over from the first quarter in China during the early part of the quarter. But as production ramped back up, the bigger challenge proved to be around logistics and skyrocketing costs to transport finished PCs out of China to markets around the world. Today, most of those challenges have abated, thanks in part to an uptick in passenger airlines shifting their focus to moving freight.
One of the other key shifts during the quarter was a massive move by buyers to online purchases. As you might imagine, with many traditional PC channels closed or operating under restricted access and hours, both commercial and consumer buyers shifted their purchases to online channels. We are still working to understand the extent of this shift but will be watching to see if this change becomes permanent in the coming quarters.
Strong Chrome Volumes
Operating-system splits for the quarter are still a work in progress, but early indications show that all the major OSes—Windows, macOS, and Chrome—saw strong volumes in the quarter. However, early signs point to a particularly good Chrome quarter driven by education buying in the US, but with reasonable strength in both traditional commercial and consumer, too.
We saw education purchases of Chromebooks in the US pulled ahead to the second quarter, ahead of the traditional buying season, as schools moved to outfit students for learning at home. There are some indications that this buying has continued into the third quarter, as schools prepare for a challenging fall semester that could require additional distance learning scenarios. One of the critical questions, as we look ahead, is where school districts are going to find the money to continue buying large volumes of Chromebooks. Many face looming budget cuts driven by tax revenue declines. While current government stimulus helps offset this, it is unlikely to make up all the difference, especially for schools that were not already planning 1-to-1 device deployments for students.
While schools drove the bulk of purchases, we also saw businesses and consumers buying more Chromebooks during the quarter, too. And we also saw a notable uptick in low-priced Chromebooks based on Media Tek ARM-based processors.
Now, in early July, we have continued to see strong PC shipments into the channel. But, at some point, the global recession is going to impact the PC market. It has already slowed small-business purchases, and eventually, larger companies and consumers will slow their purchases as they make plans to weather the downturn.
Regardless, the degree to which both the commercial side of the business (including education) and the consumer side saw growth during the early days of this pandemic bodes well for the PC industry long term. When things took a turn for the worse, people turned to the PC. The PC remains crucial to how employees get work done, how students learn, and how many people relax, play games, and consume entertainment. While there are undoubtedly challenging times ahead, I am excited to see how the industry will evolve its offerings over the next 18 months to accommodate our next normal.