Recession fears, rising inflation blamed for weak PC demand IN PH

THE personal computer (PC) market in the Philippines has decreased by 18.5 percent quarter on quarter, according to a market intelligence provider.

International Data Corp. (IDC) reported Monday, March 13, 2023, that demand also fell by 48.9 percent year-over-year, logging only 464,000 units last year. The traditional PC market is composed of desktops, notebooks and workstations.

Jeeno Velasco, associate market analyst, IDC Philippines, in a statement said, the market declined across notebooks and desktops as consumers shifted their buying focus to other things, especially during the holiday season.

“Household consumption was largely fulfilled and refocused on other spending activities geared toward the holiday season. Macroeconomic pressures further drove inventory rationalization among vendors,” she said.

Moreover, demand from the private and public sectors also weakened. IDC said the national government hasn’t announced any major plans involving information technology spending, while the enterprise segment is more reluctant to procure more units due to its negative financial outlook.

“Demand for desktops and the influx of company workers required to report back to work should have increased shipments for the corporate sector, but this didn’t pan out. Economic issues such as rising inflation, higher interest rates, and a looming recession from abroad dampened corporate spending, especially for business process management companies,” added Velasco.

Asia/ Pacific demand

Meanwhile, the PC market in the Asia/Pacific (including Japan and China) region posted an 11.6 percent decline in 2022, reaching 106.6 million units. IDC said PC shipments are also expected to decline in 2023 as inventory correction, fulfilled demand, and economic pressures will continue to negatively impact PC sales, especially in the first half of the year.

“At the start of 2022, the Asia/Pacific region continued to benefit from an improved supply that began in the second half of 2021. However, 2022 shipments to the region were lower than the previous year as the PC market was negatively impacted by weakened demand across the consumer and commercial segments. The lifting of lockdown measures and the fulfilled demand from purchases in the past two years have contributed to the change in spending priorities,” said Matthew Ong, senior market analyst, devices research at IDC Asia/Pacific.

After the record high volume in 2021, notebook shipments declined by 8.6 percent annually and recorded 70.6 million units in 2022 as demand tapered in the second half of the year, which led to overstock across channels.

Desktop shipments came in at 34 million which is a 17.5 percent annual decline because of the weak desktop market in China during lockdowns. The Asia/Pacific region (excluding China) posted growth in desktop shipments thanks to return-to-office demand.

Top 5 vendors

Lenovo continued to lead the traditional PC market in the Asia/Pacific region, with 29.2 percent market share. Amid a decline of 13.5 percent, it saw growth in India, the Philippines, and Vietnam due to strong commercial demand in the first half of the year.

HP Inc., which came second, posted a decline of 12.1 percent followed by Dell Technologies, which lost market share and posted the largest year-on-year decline of 19.6 percent. Asus was the only vendor, ranked fourth, that posted growth of 3.8 percent followed by Acer Group, whose shipments declined by 15.8 percent.

Consumer shipments declined by 6.7 percent in 2022, totaling 53.5 million units.

Desktop shipments were reduced by 14.4 percent while consumer notebooks declined 4.5 percent as consumer spending shifted away from PCs and towards travel and leisure activities after lockdowns were lifted.

2023 projections

For this year, traditional PC shipments in Asia/Pacific, according to IDC are forecasted to record a reduction of 7.6 percent, with volumes forecasted at under 98.5 million units.

“The first half of the year will likely see a decline in all countries as vendors ship in lower volumes to reduce channel inventory. The commercial segment is expected to limit spending due to the challenging market conditions while consumers prioritize spending on essential goods amid the rising interest rate and inflationary environment,” the IDC said.

The opening of borders in January 2023 by the largest market in the region (China) will also spur consumer spending in other areas instead of devices. The PC market is forecasted to see some recovery towards the end of the year when macroeconomic conditions improve.