PC vendors need not fret despite registering one of the lowest quarterly growth rates in the first quarter of 2016, according to technology research firm Gartner.
Despite declining PC sales, the ultramobile premium segment remains a bright spot and is set to achieve revenue growth this year — the only segment to do so, its research found.
The ultramobile premium segment devices include the Apple MacBook Air, Microsoft Surface Pro and Lenovo Yoga Pro series.
After all, according to Gartner principal analyst Meike Escherich, PCs are no longer the first or only devices that users are choosing for Internet access.
The ultramobile segment is estimated to reach US$34.6bil (RM150bil) by the end the year, an increase of 16% from last year.
Gartner forecasts that the segment will become the largest segment of the PC market in terms of revenue by year-end at US$57.6bil (RM340bil).
“The ultramobile premium market is also more profitable compared to the low-end segment, where PCs are priced at US$500 (RM2,000) or less, have 5% gross margins,” said Gartner research vice president Tracy Tsai.
Tsai said the gross margins can reach up to 25% for the premium PCs priced from US$1,000 (RM4,000).
The segment is expected to continue growing due to the replacement demand for traditional PCs and touch devices that the 2-in-1 market (tablets and hybrids) provides.
Gartner said that while the average selling price for the ultramobile premium segment is not expected to fall rapidly, it will eventually move toward US$600 (RM2,500) in constant-currency terms.
Gartner said that the situation, together with innovative 2-in-1 products, will entice users to not only replace their PCs, but also look to upgrade to a device with more functionality and flexibility.
Another bright spot for PCs is the gaming market. While it is a very small market with only a few millions unit sold a year, Gartner noted that the average selling price of a gaming device is significantly higher than that of a non-gaming machine, ranging from US$850 (RM3,500) for an entry-level notebook to US$1,500 (RM6,000) for a premium model.
"The high-end, purpose-built gaming PC segment is where PC vendors should focus for long-term profitability, despite this segment's competitiveness," said Tsai.
The firm believes that the Internet of Things (IoT) is where PC makers need to turn to for potential profit, adding that IoT can be used to improve customer service and product improvement.
"Vendors could detect with sensors if a battery is getting too hot or a hard-disk drive is being overworked, and they could send an alert to customers to get PCs checked before they suddenly go down," said Tsai.
"This would save vendors' operating costs and also helps users with better service."
Dwindling PC shipments
Over the last five years, global shipments of traditional PCs (desktops and notebooks) have fallen from 343 million units in 2012 to an estimated 232 million units in 2016.
In terms of revenue, the global PC market has contracted from US$219bil (RM900bil) in 2012 to an expected US$112bil (RM456bil) in 2016.
Tsai also noted that many vendors in the mid-tier of the PC business are struggling, as seen in the reduction of their regional and country-level presence, or leaving the PC market altogether.
“Between them, Acer, Fujitsu, Samsung, Sony and Toshiba have lost 10.5% market share since 2011 and in the first quarter of the year, Dell, HP, and Lenovo gained market share but recorded year-on-year declines,” said Meike Escheric, principal research analyst at Gartner.
The firm noted that the United States, China, Germany, Britain and Japan remain the top five in terms of volume but consumers have also been cutting the number of PCs per household in these markets.
"Nevertheless, PCs are still able to deliver in areas that smartphones and tablets cannot, with larger screens, ergonomic keyboards, greater storage and more powerful computer processors," said Tsai.
"With an oversaturated market and falling average selling prices, PC vendors must focus on optimising profitability to sustain growth,” she said.
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