Higher spec machines lift US PC revenues 40% even as shipments drop

Desktops, inflation and other factors also shaping American demand

US PC shipments fell by double digits in the first quarter of 2022, mostly due to the collapse of Chromebook orders, yet the effect of inflation and a greater mix of higher spec machines lifted the value of those sales.

According to data compiled by tech analyst Canalys, some 19.554 million units were shipped into the channel during the three months, down 14 percent year on year, but revenues were up a whopping 40 percent.

This is the third straight quarter of unit sale declines after the "relative strengths of end-user segments changed," said Brian Lynch, research analyst. "The consumer and education segments saw demand slow further due to market saturation and rising concerns about inflation, which peaked in March at 8.5 percent, the highest rate of 12-month increase since 1981."

The US typically accounts for up to 80 percent of global Chromebook sales, however, the rapid growth rates witnessed in the earlier stages of the pandemic have gone for now.

Notebook sales fell 22 percent in the quarter, "mostly due to the drop off in Chromebook purchasing for education, which peaked in early 2021," said the analyst. Tablet sales edged up 5 percent – caused by a backlog of orders prior to the holiday season spilling into 2022.

Desktop drivers

And so it was left to the humble desktop to help lift the market: shipments of desk-based machines went up 33 percent. Lynch said that hybrid works continues to be a "key driver for commercial shipments."

"Features to support hybrid workstyles, such as better audio/video capabilities and longer battery life, have become increasingly important, giving workers more reason to ask for device upgrades."

Lynch reckons demand for PCs from businesses will hold up this year, "despite the macroeconomic pressure facing the PC industry and will help limit the overall expected shipment declines."

The reason for the blow-up in US revenues is several fold: the shift in the market toward business devices and "constraints around supply and logistics" is causing vendors to prioritize component supplies to more valuable machines.

Dell continued to lead the US PC market both in terms of notebooks and desktops, growing 7 percent in shipment terms to 5.147 million. Apple and Acer also grew, up 18 percent an 3 percent to 2.671 million units and 1.1 million units respectively.

HP was hit hard by the Chromebook factor, declining 40 percent to 4.298 million, as was Lenovo which reported a shipment fall of 24 percent to 3.263 million units.

During a conference call last week to discuss its most recent earnings, HP Inc CEO and president Enrique Lores said it is executing against a plan to "expand into valuable [market] adjacencies" and "build a more growth oriented portfolio."

Lores agreed "secular tailwinds associated with hybrid" working are driving the PC industry.

"The way people work and live have fundamentally changed, and we see this trend continuing across our segments long past the pandemic. This creates incredible opportunities for innovation and growth."

In its most recent earnings call with analysts, Luca Rossi, EVP of the Lenovo Group, said average unit prices will continue rise in 2022 "due to improved mix premium" and "more commercial business" where margins are higher.

However Lenovo warned that the lockdowns in Shanghai, which mostly came to an end just last week, will dent product availability, something echoed by Apple and Cisco.

Lynch at Canalys said: "The US market remains a priority for many vendors, so while short term supply may be constrained, it will be to a lesser extent than in other regions." ®

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