The recently released Gartner data shows that the PC industry continues to decline. Windows 8 has totally failed to revive the popularity of PC/notebooks, and the market is now looking towards Intel’s energy efficient Haswell chips to revive interest in PCs.
Lenovo is the only PC OEM which continues to prosper even in these miserable conditions. The company is leveraging its Chinese manufacturing and is offering low cost reliable products.
Dell Inc. (NASDAQ:DELL) has been the most severely affected due to the PC decline because its revenues are highly dependent on PC sales. There seems to be no end to the struggle between Carl Icahn and Michael Dell over control of the troubled OEM. Shareholders are scheduled to vote on the ‘founder’s bid’ to take the company private. If the vote fails, it is highly likely that Dell’s valuations will slide. This limited upside and huge downside make Dell Inc. (NASDAQ:DELL) a good ‘short’ target.
The rising popularity of smartphones and tablets has pushed PC to the brink. The entire PC industry was expecting Microsoft Corporation (NASDAQ:MSFT)’s Windows 8 to change their fortunes. However, this master comeback plan has backfired. The company launched its first touch based operating system last year to high market expectations. It initially predicted sales of around 400 million but has recently revealed that it has managed only 100 million.
The Windows 8 was not a miscalculation and the reason behind its failure is external. The industry didn’t have the hardware to support a touch based user interface. The enterprises were still not ready to switch to the unfamiliar touch UI territory. Microsoft Corporation (NASDAQ:MSFT) expected the Surface tablets to introduce consumers to Windows 8 and showcase the elegant OS. The devices were highly capable and beautiful, to say the least, but had terrible battery timings.
Failure of Windows 8 has badly bruised the entire PC industry, OEM (Original Equipment Manufacturers) and PC semiconductors have been the worst affected. OEMs are playing catch-up with Android tablets, on the other hand semiconductors are looking for more energy efficient chips. Among all this disappointment, Gartner has released PC statistics for the second quarter of 2013.
According to the recently released PC industry data, the entire industry has continued its downward decline. Worldwide shipments declined by 10% year-over-year to 76 million units as compared to 85 million units during the same period last year. There was a decline in PC shipment across all continents, and this is the fifth continuous quarterly decline in PC shipments. The research firm blames the rising popularity of cheap Android tablets as the primary factor behind the decline in popularity of PCs and notebooks.
The competition for the top spot in the PC market is still neck to neck between Lenovo and HP. The Chinese OEM has been banking on its ability to target the vast Chinese PC market. The company’s products have quickly emerged as the symbol of reliability and affordability in the PC consumer markets. PC’s descend from being a premium product has actually helped Lenovo gain market share. As consumers are no longer willing to pay a premium price for PC products (instead paying a premium for smartphones and tablets), high priced HP and Dell Inc. (NASDAQ:DELL) products are losing consumer favor. Gartner also agrees that the Asia/Pacific region has been the weakest for HP due to cost competition from Lenovo.
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