Cost-cutting spurs PC sales in Europe: UK stuck in a rut

Analysts don't understand how bad it is, says analyst

The European PC market remains one big bargain basement clear-out, according to Q2 stats from channel analyst Context.

Sales-out data collated from major distributors in the region showed that vendors' price-cutting efforts to reduce the glut of PCs in the supply chain fuelled a 3 per cent sales rise but as a result, corresponding revenues slid 3.5 per cent.

"What's causing a large part of this slowdown in PC sales is the collapse in consumer demand," said Jeremy Davies, CEO at Context.

He noted high inventory holdings in distribution were "clogging up Europe's reseller channel" from the end of 2010, and corrective actions from the major PC players saw average sales prices dropping €442, "the lowest ever".

The market in Europe was not all doom and gloom though, as shiny fondleslabs continue to defy the slowdown in consumer spending, and the professional buyers continued to refresh aging infrastructures.

"Tablet PC sales continue to accelerate, with unit sales up 330 per cent for the quarter compared to a year ago, and there's strength in some countries' business markets as we have seen server sales grow slightly, and sales of workstations up by 19.9 per cent over the same period," said Davies.

The UK, however, is stuck in a rut, with sales collapsing nearly 10 per cent, and revenues down by 9.5 per cent. Volume shipments of PCs, low-end servers and workstations have dropped 10.7 per cent, but the value segment went up by 11.3 per cent.

Davies told The Reg that the short-term outlook for the UK remained challenging, and that the severity of the situation was not understood by some other analysts.

"I hear that stock levels are still challenging, and not likely to go away until well past the back-to-school season," he said.

"I also hear that there are some really silly forecasts out there re Q3 and Q4, way too high because nobody really understands just how bad it is for some vendors," added Davies. ®