Slumping PC Sales Ripple Through Tech Industry

By CIOinsight  |  Posted 07-13-2012 Print Email
The slowing consumer sales that are hitting HP, Dell and other OEMs are being felt farther down the line, from chip maker AMD to chip equipment vendor Applied Materials.

Consumers are continuing to hold back on buying PCs--either waiting for the arrival of Windows 8 devices or spending their money instead on tablets and smartphones--a trend that is having a ripple effect through parts of the tech industry.

Those most immediately impacted are the PC makers themselves, who saw continued contraction in the market in the second quarter, according to market research firms IDC and Gartner. Hewlett-Packard and Dell in particular were hit hard, with both seeing double-digit percentage declines in units shipped, while Lenovo, Acer and Asus fared better.

However, the affect also has been felt by chip maker Advanced Micro Devices, which on July 9 announced preliminary second-quarter financial results that showed revenues decreasing by as much as 9 percent over the same period last year--and after the company's initial forecast showed a 3 percent revenue increase. AMD officials cited continued weakness in the consumer market as a key reason for the revised revenue numbers.

AMD is scheduled to announce official results July 19, two days after rival Intel unveils its second-quarter financial earnings. Some analysts have speculated that Intel, which has been working hard over the past couple of years to expand its portfolio beyond PC and server chips, could feel some impact of the slowing consumer PC market.

A day after AMD's announcement, officials with chip equipment maker Applied Materials said the company would not meet its full-year revenue target of $9.1 billion to $9.5 billion, due in large part to demand from chip foundry customers that was weaker than expected.

Vendors are still selling PCs--according to Gartner analysts, in the second quarter, 87.5 million units were sold worldwide. But the slowdown in consumer sales in particular, combined with the uncertain global economic outlook, will make for some more difficult times ahead in the PC industry, at least through the next two quarters, when sales of systems with Microsoft's Windows 8 should help stem the bleeding.

"Consumers are less interested in spending on PCs as there are other technology product and services, such as the latest smartphones and media tablets that they are purchasing. This is more of a trend in the mature market as PCs are highly saturated in these markets," Mikako Kitagawa, principal analyst at Gartner, said in a statement.

David Daoud, research director for personal computing at IDC, said the troubles besetting the PC industry are numerous, particularly in the United States.

"The U.S. market suffered a double-digit contraction in the second quarter as market saturation and economic factors combine with anticipation of Windows 8 and other changes later in the year," Daoud said in a statement. "In this context, consumers are delaying purchases, and vendors and retailers are slowing down their PC activities to clear existing inventories. The situation is exacerbated by consumer notebook saturation, a slowing replacement cycle in the commercial sector, and the big macro-economic and political events affecting confidence and spending."

Even with the release of Windows 8 sometime in October, IDC analysts don t expect it to boost PC sales to any great degree until at least the fourth quarter.



 

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