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Can the PC Market Bounce Back From Its Recent Declines?

Global PC sales that skyrocketed during the peak of the pandemic have once again started declining. Demand for PCs has been slowing over the past few years, but the pandemic helped sales to rebound as millions worked and learned remotely. As things get back to normal, with people once again going back to offices and schools, demand for PCs, which include laptops and tablets, seems to be dwindling once again.

However, the economic reopening isn’t the only reason that can be traced back to the decline in global PC sales. The industry is facing several challenges, including a supply-chain crisis, and needs to overcome several other barriers to bounce back from the present situation.

Global PC Shipments Declining Again

The pandemic rattled several industries but also gave a fresh lease of life to many others. Among them, the PC market was one of the biggest beneficiaries. However, things have changed once again and sales are plummeting this year.

According to a report from Gartner, global PC shipments totaled 72 million units in the second quarter of 2022. The number might look impressive, but when compared to the previous year, the decline is 12.6%. Moreover, this is the sharpest decline in nine years.

PC sales started slowing last year after the economy started reopening. However, it was still on track. The decline started in the first quarter of 2022 and sales further plummeted in the second quarter. One of the major reasons for the decline in 2022 is a drop in sales of Alphabet, Inc.’s GOOGL Chromebook. Global PC shipments totaled 77.9 million units in the first quarter of 2022.

Overall, 2022 has so far been quite difficult for the industry and if the challenges continue, global PC shipments will decline 9.5% year over year in 2022, according to a separate report from Gartner.

Global shipments of all types of devices, such as PCs, tablets and smartphones, are expected to decline by 7.6% in 2022.

Challenges Aplenty

The decline in the second quarter has been impacting the big players the most. Although their ranking remained the same, the top three PC manufacturers have also witnessed the biggest decline during this period. Lenovo Group Limited LNVGY, which is still the market leader, saw a decline of 12.5% in its PC shipments in the second quarter of 2022. Although Lenovo Group Limited grew 2% in the global PC market, this is the third consecutive quarter of decline for the company.

HP Inc. HPQ still holds the second position with a market share of 18.8%. However, HPQ’s PC shipments declined 27.5% in the second quarter, the worst drop among the top players. Dell Technologies Inc. DELL is the third largest player. DELL saw shipments declining 5.2% in second-quarter 2022. Dell Technologies’ decline is relatively lower compared HP Inc., which helped it inch closer to HPQ in terms of market share. Dell now has a market share of 18.5%.

However, market shares don’t count much when compared to the sharp declines witnessed by these companies.

Apple, Inc. AAPL is the only company among the top five to have registered growth — 9.3% from the previous quarter — in the second quarter. AAPL currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

That said, the decline in PC shipments is due to several reasons. The ongoing geopolitical instability is hampering production and supply chain, as many companies have stopped production in their units in Russia.

Moreover, inflationary pressures have made people spend cautiously, which saw demand for Chromebooks decline in the second quarter. Also, delivery delays have been affecting the sales of PCs.

Major reasons behind the supply-chain crisis are the shortage of components, especially semiconductors and logistic disruptions. Enterprise buyers have been waiting for the longest time to get deliveries this year.

However, the good news is that the situation began to improve by the end of the second quarter, which may now fasten deliveries. Cities in China have started reopening after the sudden COVID-19-induced lockdown earlier this year, which is likely to expedite production.

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