Last month Gartner published its findings on the PC market in the US. There we saw shipments down 5% on the same quarter last year. In Europe, which has been blamed for many of the woes of major US corporations like HP and Dell, the pain is double what it is in the US. Sales over the fourth quarter declined by 11.7%.

This is quite an astounding decline especially when you consider that in 2011, the year before that again, it declined by 14%, which at this point seems to suggest a market that is in terminal decline.

PC Market Europe

While the economic woes of Europe over the past four years have been well documented, they still don’t explain this kind of collapse. Outside of some of the peripheral economies like those of Ireland, Portugal and Greece, the core industrial economies in the UK, France and Germany are still strong and there is still substantial consumer buying power, even if the shadow of recession is never far away.

That’s all by-the-by though. Something is happening in the PC market that points to a fundamental shift in the way people and companies are investing in technology.

While Gartner has tried to see the positives in these figures by pointing to the fact that the decline in Q4 2012 was less pronounced than it was in Q4 2011, there’s no getting away from what’s happening out there.

The PC market in Western Europe is in a downward spiral. In 2012, it experienced the second consecutive year of decline, but less steeply than in 2011, when the PC market in Western Europe decreased 14 percent. The second consecutive yearly decline indicates that the issues the PC market faces are beyond a weak economy, a poorly understood new operating system, or Ultramobiles being priced too high to generate demand," said Meike Escherich of Gartner.

And that, in a single statement, knocks many of the excuses that are being bandied about to explain the decline on the head. You can’t blame weak economies, poorly understood operating systems, or overpriced IT. There is something else.

Anecdotal evidence suggests that the shift is more to do with mobile computing in the shape of tablets or smartphones pointing the way to where vendors might go to salvage the situation, but until some kind of definite study of this decline over the past 12 months is conducted no one can say for definite.

In the future, we expect buyers will not replace secondary or tertiary PCs in their households by allowing them to become obsolete, preferring instead to purchase tablets. We should see an increase in PC margins as users favor PCs with richer applications," Escherich added.

PC Sales Figures Q4

But before writing off the PC and the vendors that are selling them, there is still life in the market yet. Despite the figures in percentage, in terms of shipments, there were 15.3 million units shipped in the fourth quarter of the year, and 58 million over the year, even if this represented a decline of 8.4% on 2011.

Breaking these figures down a little bit further we see that the decline was across the board with mobile and desktop PCs decking by 12.1% and 10.9 respectively. The decline in respect of enterprises was less pronounced due to replacement purchases and only declined by 4.9%, while the consumer PC market plummeted by 17.6% as economic difficulties hit consumers’ pay packets.

Digging deeper, while there are a few black spots for HP, it seems Meg Whitman’s decision to keep it in the PC game for a while at least had merit to it. HP still has the lion’s share of the market in Europe at 21%, which is up 1% of market share year on year, even if the number of units declined by some 8.8%.

Comparatively, this is at the lower end of the decline table with Dell down 21% in terms of market share. Elsewhere, there is an interesting story that continues to build steam elsewhere as Lenovo continues its inimitable growth.

Gartner PC shipments.jpg
Gartner: PC Shipments in Europe in Q4 2012

While losing a part of its share in the mobile and home PC segments in Western Europe, it is still the market leader in the desktop and PC markets, which will no doubt reassure shareholders who have been looking for any signs of recovery across the troubled tech giant.

Geographies, Brands

In the fourth quarter of 2012, Acer, Lenovo and Asus reached 11 percent market share. While there was considerable jostling for place over the quarter with Acer dropping into third behind Asus, the really impressive story over the quarter was Lenovo which grew by 65% in the consumer PC market over the quarter. Dell, however, went in the opposite direction, but with the recent privatization announcement, at least it looks as if there is a least some kind of plan to turn its fortunes around.

From a geographical perspective, points of note include:

  • UK: In 2012, the PC market declined 3 percent totaling 11.7 million units, after a fall of 13 percent in 2011. IN Q4, UK sales totaled 3.1 million units, a slight decrease of 0.7% on last year.
  • France: Total shipments in 2012 reached 10 million units, a 6.4 percent decline from 2011. This is the second consecutive year that the PC market in France has declined. PC shipments totaled 2.5 million in the fourth quarter of 2012, a decrease of 13.6.
  • Germany: In 2012, 1 million fewer PCs were shipped than in 2011, meaning that the overall value of the market last year declined by 8 percent from 2011. PC shipments in Germany totaled 3.4 million units in the fourth quarter of 2012, a decrease of 11.9 percent compared with the same period in 2011. In 2012, 1 million fewer PCs were shipped than in 2011, which resulted in the PC market in Germany declining 8 percent from 2011. Mobile PC shipments declined 15 percent in the fourth quarter of 2012, while desktop PC volumes decreased 6 percent year on year.

Where all this goes is anyone’s guess as the inevitable upturn that is expected to start this year could well change these figures. However, it seems that usage patterns have changed so radically that Gartner is not predicting a return to the levels we saw in the past.

The battle for consumer wallet share continues between the different devices…The PC appears to be the first to fall by the wayside side as usage patterns have shifted toward smartphones and tablets. This ongoing trend will have a profound impact on the current and potential installed base for PCs. Neither Windows 8 nor the new Ultramobile PCs were able to generate significant new PC demand during the fourth quarter," Escherich said of the German market.

And there doesn’t seem to be any reason to think that it is different anywhere else. More on this as the information becomes available, but no major recovery expected for PCs.