Repositioning of major OEMs brings about solid 2007 PC market

Preliminary December quarter results from market researchers at Gartner and IDC show a healthy PC market with vendors repositioning their channels and going after new markets, while falling prices and portable adoption continue to drive volume.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 1/17/2008

Shifting strategies among the major PC OEMs and unexpected strength from the United States led to a robust close to 2007, according to 2 of the industry’s leading research companies.

Both Gartner and IDC released preliminary shipment numbers for full-year 2007 and Q4 this week, making note of shifting rankings among the top 5 vendors and the impact of the US market.

According to Gartner, worldwide PC shipments totaled 271.2 million units in 2007, a 13.4% increase from 2006, capped off by Q4 PC shipments of 75.9 million units, a 13.1% increase from Q4 2006. Along the same lines, IDC reported that 2007 total PC shipments reached 269 million units with growth of 14.3% year over year, closed by a Q4 that saw 15.5% growth as compared to Q4 2006.

"Fourth quarter results show a very healthy PC market," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker, in a statement issued Wednesday. "There is a lot happening with vendors repositioning their channels and going after new markets while falling prices and portable adoption continue to drive volume.”

Indeed, both research companies now firmly rank HP as the number 1 PC OEM by shipment and market share, reporting solid leads over its once close rival Dell (see data below).

“HP established a solid number 1 position in 2007. Robust consumer and mobile PC sales across all regions were two main drivers of HP’s overall growth,” said Mikako Kitagawa, principal analyst for Gartner’s Client Computing Markets group, in a separate statement also issued Wednesday. “The company experienced the strongest growth among the top 5 vendors in fourth quarter of 2007, as its shipments increased 23.3% in the quarter.”

Meanwhile, Dell turned a corner in the PC supply chain by achieving shipments growth in Q4 for the first time in last five quarters. While Dell’s PC shipments grew just 1.7% in 2007, due in part to the company’s reorganization, the company showed signs of a recovery at the end of the year as it registered positive year-over-year growth for 2 consecutive quarters, according to Gartner. In Q4, Dell’s worldwide PC shipments grew 17%, as its market share reached 14.5%. The research house attributed the return to growth to Dell’s retail and channel partner expansion in several markets, including the United States and Asia/Pacific.

The 2 research companies pegged Taiwan-based Acer as the number 3 ranked PC OEM for the first time overtaking China-based competitor Lenovo in Q4. In the quarter, Acer achieved solid consumer mobile PC growth in EMEA (Europe, Middle East and Africa) and the United States. Acer’s acquisition of Gateway’s consumer business was also credited by Gartner and IDC as boosting the company’s shipment volume. Lenovo was hurt by its weak consumer presence in Q4 – an issue the company took steps to alleviate by announcing its Idea line earlier this month – however, still showed relatively good performance in consumer sales in both EMEA and the United States during the quarter, according to data from the researchers.

Changes to the PC OEM rankings were credited in part to the growth in the US market that exceeded expectations. According to Gartner, the US PC market grew 5.3% in 2007 with shipments reaching 64.2 million units with Q4 shipments totaling 17 million units, a 7.2% increase from Q4 2006. More confidently, IDC reported that the US market saw growth rise to nearly 9% in Q4 as expansion of retail channels and competition among major vendors drove volume.

“The better-than-expected growth in the US market can be largely attributed to channel realignment among key players, particularity through the retail expansion of Dell and Acer," said David Daoud, IDC’s personal computing research manager, in the company’s statement. "The results, however, do not reflect changes in the fundamentals of demand. Consumers continue to be attracted by mobile platforms and are benefiting from the proliferation of channels and heightened competition, which continue to bring prices down. Going forward, demand could soften further if bad news over the economy persists and consumer confidence worsens."

Therefore, the research company remained cautious on this year’s and next year’s PC markets.

“Despite fourth quarter strength, projections for the next couple years anticipate slower growth. Rising concerns about economic growth are likely to reduce expectations further, although we're still likely to see double-digit growth through 2008 and probably 2009," IDC’s Loverde said.

For commentary on this story, see "Dell’s outlook improves, but PC market outlook doesn’t."

Gartner data

Top 5 vendors, worldwide PC shipments, Q4 2007 (units shipments are in thousands)