Should leaders place bets on new PCs or generative AI?

Here's a hint: Leaders are putting laptop orders on ice

PCs were once the hottest tech item of the pandemic, yet these days most of the big brands are still struggling to find new homes for their aging inventory that isn’t a shelf in a distributor or retailer’s warehouse.

And so it continued in calendar Q2 when worldwide shipments of computers sold into the channel shrank 13.4 percent year-on-year to 61.6 million units, according to IDC data. This was better than the drama of the prior quarter but weakness lingers.

The only top five vendor to report growth this time round was Apple - like in Q1 - with Mac sales estimated to be up 10.3 percent to 5.3 million units. Apple benefited from a weaker comparison period a year ago when Mac supply chains in China shut down, IDC said.

The next best performer was HP, declining 0.8 percent to 13.4 million. It “faced an oversupply of inventory” in the past 12 months and is now edging closer to more normal levels of six to eight weeks worth of stock.

This is a point made by CEO Enrique Lores in HP’s latest quarterly results, although price promotions took a toll on HP’s profits in Q1 of its financial year.

As for the others, Lenovo, Dell, and Acer collectively sold seven million fewer PCs into the channel during the quarter. Lenovo shipments dropped 18.4 percent to 14.2 million units, Dell declined 22 percent to 10.3 million, and Acer was down 19.2 percent to four million.

It is “inflated channel and component inventory” that continues to drag down the market, the analyst said, with retailers and distributors wary of ordering more stock.

“Companies don’t want to be caught with short supply like they were in 2020 and 2021, but at the same time, many seem hesitant to make the big bets on a market rebound,” said Ryan Reith, IDC group veep for Client Devices Trackers.

“On the consumer side, we’re seeing a return to pre-pandemic habits where computing needs are shared across multiple devices, and we firmly believe the consumer wallet will favor smartphones over the PC.

“On the commercial side, workforce reductions (for many big companies) as well as the introduction of generative AI only add more confusion as to where to place an already reduced budget.” ®

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