By Vikram Sethi

Worldwide PC shipments totaled 91.8 million units in the third quarter of 2011, a 3.2 per cent increase from the third quarter of 2010, according to preliminary results of a study released by Gartner. It had earlier projected a 5.1 per cent growth for the quarter.

“The inventory buildup, which slowed growth the last four quarters, mostly cleared out during the third quarter of this year; however, the PC industry has been performing below normal seasonality,” said Mikako Kitagawa, principal analyst at Gartner. “As expected, back-to-school PC sales were disappointing in mature markets, confirming that the consumer PC market continues to be weak. The popularity of non-PC devices, including media tablets, such as the iPad and smartphones, took consumers’ spending away from PCs.”

As the PC market faced a slowdown, vendor consolidation become a more apparent trend in the industry. Lenovo’s recent merger with NEC, and its acquisition of Medion, as well as HP’s announcement that it may spin off or sell its PC business, underlined this trend during the quarter.

HP, the number one vendor based on global PC shipments, grew faster than the industry average. Lenovo became the second-largest PC vendor in the worldwide market for the first time. Dell’s performance was below the industry average in most regions.

Snapshot – By Geography

United States: PC shipments totaled 17.8 million units in the third quarter of 2011, a 1.1 per cent increase from the third quarter of 2010. The PC market experienced YoY (year-over-year) growth for the first time in three quarters. While the consumer market continued to be weak with disappointing back-to-school sales in the third quarter, the inventory was kept mostly in check as industry expectations were relatively low.

“The main contributor to the weak consumer PC market in the U.S. was intensified competition for consumers’ money. Media tablets and smartphones took center stage in the U.S. retail sector, and the expectation is for continuing demand for these devices throughout the holiday season.

HP showed strong growth in the U.S. PC market, as shipments increased 15.1 per cent in the third quarter, and its market share totaled 28.9 per cent. Despite the potential spinoff of its PC business, HP executives’ efforts to give the appearance of “business as usual” seemed to work in the quarter.

Dell struggled as shipments declined 7.2 per cent in the third quarter of 2011.

Gartner’s early study shows that Apple experienced the strongest growth among the top five vendors in the U.S. PC market. Apple’s PC shipments increased 21.5 per cent in the third quarter of 2011. The robust growth of the MacBook Air continued to lead Apple’s overall growth in the U.S. market.

EMEA: PC shipments in Europe, the Middle East and Africa (EMEA) totaled 26.6 million units in the third quarter of 2011, a 2.9 per cent decline from the third quarter of 2010.

The EMEA region contributed to lower-than-expected growth led by a weak Western European market. PC shipments totaled 26.6 million units in the third quarter of 2011. The PC market in EMEA remained weak in the third quarter of 2011, due to slow consumer demand and lower sell-in to the channel. As a result, the market recorded its third consecutive quarterly decline.

In an uncertain environment, QoQ (quarter-on-quarter) growth provides a better indication of the dynamics of the EMEA PC market. The EMEA PC market exhibited growth of 17.1 per cent from the second quarter of 2011. This level of growth was higher than seasonally expected, and a sign of some stability, especially after four weak quarters.

Many PC vendors were banking on media tablets to boost their growth in the second half of 2011, but given the collapse of the non-Apple part of the media tablet market, most have refocused on getting PCs into retailers. However, retailers remain cautious about demand and have shortened their order lead times. This passes more cost on to the PC vendors at a time when margins are under pressure.

APAC: In Asia/Pacific, PC shipments reached 31.8 million units in the third quarter of 2011, a 6 per cent increase from the same period last year. Vendors continued to stimulate demand aggressively with promotions and prices, benefiting buyers looking for good prices. It also provided an opportunity for some consumers to buy their first mobile PC.

Latin America: The PC market in Latin America grew 19.6 per cent in the third quarter of 2011. Mobile PC shipments grew 31.1 per cent year over year, and desk-based PC shipments increased 6.5 percent in the third quarter of 2011.

Japan: PC shipments in Japan grew 3 per cent, with shipments reaching 3.9 million units. The consumer market received a boost in demand with the introduction by vendors of new consumer models in September. There was also a rebound in production for the professional market, after a drop in enterprise demand because of the higher prioritization for business continuity plans that coincided with the earthquake and tsunami in March.

The inventory buildup, which slowed growth the last four quarters, mostly cleared out during the third quarter of this year; however, the PC industry has been performing below normal seasonality. Back-to-school PC sales were disappointing in mature markets, confirming that the consumer PC market continues to be weak. The popularity of non-PC devices, including media tablets, such as the iPad and smartphones, took consumers’ spending away from PCs.

Snapshot – By Vendors

HP: HP continued to be the leading vendor based on global PC shipments. HP grew faster than the industry average, and its market share reached 17.7 per cent. Despite announcing in the middle of 2Q11 the potential spinoff of its PC business, HP experienced strong growth in the U.S., while outside the U.S., growth was relatively weak or average. HP showed strong growth in the U.S. PC market, as shipments increased 15.1 per cent in the third quarter, and its market share totaled 28.9 per cent. Despite the potential spinoff of its PC business, HP executives’ efforts to give the appearance of ‘business as usual’ seemed to work in the quarter.

HP regained the No. 1 position from Acer in the EMEA and grew its market share by 1.1 percentage points year-on-year. HP managed the impact of separating its PC division better than Gartner had expected, it said.

Lenovo: Lenovo became the second-largest PC vendor in the worldwide market for the first time. The company’s expansion was boosted in part by the joint vendor with NEC in Japan. However, its aggressive marketing to both the professional and consumer PC markets accelerated its shipment volume.  Lenovo performed strongly in both the professional and consumer markets in the EMEA region. It took advantage of HP’s strategic issues and Dell’s inability to match Lenovo’s prices in the professional market.

Dell: Dell’s performance was below the industry average in most regions, as the company faced intensified competition in the professional space, where Dell has been traditionally strong. In the US, Dell struggled as shipments declined 7.2 per cent in the third quarter of 2011. “Dell’s issue has been balancing profitability and market share gain, a difficult task in a PC industry where high volumes and low margins are the norm,” Kitagawa said.

Acer: Acer mostly cleared its inventory buildup in the EMEA region by the third quarter of 2011. However, channels have been adopting a conservative position in regard to placing orders following the inventory issues.

Asus: Asus widened the gap with Toshiba, the sixth-largest vendor. Asus achieved strong growth in China. In the U.S., Acer pulled down the market average as it continued to suffer inventory issues. Over the first three quarters of 2011, the EMEA PC market declined 4 per cent, compared with the same period in 2010. Most of the decline resulted from the continued poor performance of Acer, which declined more than 30 per cent. The prolonged inventory clearance will have a permanent impact on Acer, as its direct competitors are securing new channel and retailer partners.

Asus’s shipments grew sharply in the EMEA regsion, with increased sales of mobile PCs in both the consumer market and the small and midsize business market. It moved up to third place, overtaking Dell.

Vikram Sethi is editorial intern with techtaffy.com. He can be reached at [email protected].