PCs Miss Their Short New Lease on Life — Heard on the Street
A surge in working from home boosted demand for personal computers in the first quarter. Too bad there weren’t enough of them to go around.
Market research firms IDC and Gartner both reported a large and surprising drop in first-quarter PC sales on Monday afternoon. Per IDC, total PC shipments fell nearly 10% year over year to 53.2 million units. That comes after three straight quarters of gains helped by the aging out of Microsoft’s Windows 7 operating system. Gartner, which accounts for PC units a bit differently, reported a 12% year-over-year drop to 51.6 million units.
Both figures run counter to the notion that PC sales would jump as more workers were sent home to wait out the coronavirus pandemic. That view wasn’t without evidence. Deep-pocketed tech giants such as Apple Inc., Microsoft, Facebook and Google parent Alphabet Inc. began sending workers home in early March ahead of government-mandated shutdowns, sparking a jump in requests from employees for laptops, monitors, cables and other gear. That in turn led to reports of empty shelves at stores such as Best Buy.
But there simply wasn’t enough gear to be had. Analysts at both IDC and Gartner noted that while PC demand did indeed get a boost from the work-from-home surge, factories in China were shut down starting in late January, crimping available supply. By the time those facilities started coming back online, the pandemic had spread to the rest of the world, snarling supply chains.
Major PC and laptop makers such as HP, Lenovo, Acer and Apple all saw declines in the quarter. Dell managed a small gain, which IDC credited to “strong relationships with the supply chain.”
That naturally leads to the question of whether PC sales will improve as more supply materializes. It appears doubtful. The industry already was nearing the end of the boost it got last year as Microsoft ended support for Windows 7. Now the pandemic has put the world on track for a sharp recession that will restrict corporate technology budgets. Mikako Kitagawa of Gartner noted that companies and consumers alike will start “extending their PC life cycles on a more permanent basis as they focus on preserving cash.”
In a report earlier this month, Credit Suisse analyst Matthew Cabral noted that companies historically “are quick to cut hardware spending in a downturn.” He added that PC sales are also “largely tied to seats/employment.” Nearly 17 million Americans alone have hit the unemployment lines over the last three weeks.
The lucky few who still have generous expense accounts simply aren’t enough.