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Home working is here to stay, says Lenovo boss, and will grow the total addressable PC market by up to 30%
Hang on, didn't analyst just pooh-pooh demand? Yep
It could wishful thinking or bravado on a conference call with analysts but Lenovo is betting the current home working trend and consumers' reliance on online services will run on past the crisis and be a boon for PC makers.
As businesses shut their offices and asked staff to work remotely, orders for laptops went through the roof. According to distributor figures for the four weeks ended 22 March, laptop sales in Western Europe jumped 55 per cent.
During an earnings call to discuss financial results for its fiscal 2020 ended 31 March, Lenovo said its PC and smart devices group jumped 4 per cent year-on-year but factory closures in China had limited product supply.
Chief operating officer and corporate president Gianfranco Lanci said: "We couldn’t leverage Q4 demand too much," but said orders kept coming in.
He said currently, most households in mature markets had one or two PCs per family but due to the work from home switch, alongside education, entertainment and shopping, "the clear trend" will be one PC per person in every home.
"I don’t think it’s going to just last for the coronavirus impact, but it’s going to last forever," he said. "People will continue to work from home even after the crisis, maybe not at the same level, not to 100 per cent, but for sure a good percentage of people will."
Lenovo CEO Yang Yuanqing said feedback is that "many big corporate enterprise customers are still looking to buy or refresh employees notebooks and this looks likely to be a long-term trend."
He added: "I think it's possible the PC TAM (total addressable market) will be increased by 25 to 30 per cent in two to three years."
Facebook is opening up its offices again from July, according to Bloomberg, though Tata has said its staff will forever work from home.
If you put your sway in such things, Gartner this month forecast that device sales will fall by 15.5 per cent year-on-year in 2020 to $589.7bn; this is lower than its guidance in January of sales growing 0.8 per cent to $688bn.
Gartner analyst Mikako Kitagawa doubted PC sales will expand over the next 36 months as predicted by Lenovo, claming the figure "seems too optimistic". In mature markets, consumers buying PCs are tyically replacing an existing one, she added.
"Workers who use desktop at work," she told The Reg, "could get laptops due to the WFH (work from home) and business continuity plan. But this is also displacement of desktop with laptop.
"I don’t dismiss that there would be incremental growth. But the numbers [Lenovo] mentioned seems to be too optimistic. Replacement cycles may be shortened which could boost laptop growth."
Similarly, IDC pared back its spending outlook and reckons device sales will shrink 12.4 per cent this year.
"The PC market was already expected to decline this year after a commercial refresh cycle in 2019, leaving discretionary upgrades to new notebooks and tablets extremely vulnerable to any period of economic decline," the analyst said in early May. ®