Desktop PC sales may be on the decline, but the channel should’nt worry

Published: February 5th, 2009

It’s nothing that the channel doesn’t already know: desktop sales are declining and notebook sales are on the rise.

Based on preliminary research from IDC, Canada showed a higher overall PC growth year over year during last year’s fourth quarter, compared to the rest of the world.

According to IDC’s Worldwide Quarterly PC Tracker, for the first time in six years overall worldwide PC shipments were down.

While we’ve become acustomed to PC shipments (including desktops, notebooks, netbooks and x86 servers) growing in the double digit range year over year, last year’s Q4 saw only 0.4 per cent growth.

Tim Brunt, a senior analyst for personal computing and technology at IDC Canada, said Canada fared better than the rest of the world with a 1.9 per cent year over year increase in last year’s Q4.

“Preliminary numbers from Q4 show desktop rates declining a little over 20 per cent from the fourth quarter, while notebooks are growing at about 29 per cent,” Brunt added.

The popularity of notebooks and now more recently, netbooks and ultraportable devices, are the primary drivers that are helping keep overall PC shipment growth rates out of the negatives, Brunt said.

With the economy in a recession now, netbooks and other low-cost notebooks are becoming increasingly popular, says George Bulat, director for client hardware research at IDC Canada.

“When everyone’s concerned with how much they spend, a low-cost notebook becomes appealing to customers,” Bulat said.

Paul Edwards, director of SMB and channel strategies at IDC Canada, added the move towards mobility opens up new opportunities for partners.

“Partners can look at other mobility options to make workers across businesses more mobile,” he said. “If (partners) are big in the PC game now with desktops and notebooks and that’s what (they) base a lot of (their) business on, it’s important (they) look at other solution areas such as storage, networking, mobility, software and beyond.”

Patrick Power, vice-president of sales and marketing for Nitro Microsystems, a managed services IT outsourcing solution provider, with offices in Toronto and Ottawa, said given the weak economy and shrinking budgets, many organizations are now adopting a wait and see approach when it comes to their capital spend.

“The decline in desktop sales are at the expense of people buying more portable devices and netbooks,” Power said. “This is taking a bite out of the PC space because devices like PDAs and notebooks are becoming more functional and lower cost, so customers are getting more bang for their buck.”

This year, Brunt says he expects the demand for mini notebooks and other low-cost notebooks to continue, especially in the commercial space, where consumers often purchase netbooks as a secondary computer.

Power says he does not anticipate the demand for desktops disappearing completely, but suggests desktop sales will start evolving to suit customer needs.

“There will still be a requirement for desktops but it will change its face to target a specific type of user,” he said. “I don’t think it’ll be a one size fits all approach. We’re becoming more of a mobile world and that’s what’s changing the computing world.”

Bulat says HP (NYSE: HPQ), Acer, Dell, (Nasdaq: DELL) and Toshiba are among the top vendors leading the overall PC market in Canada for Q4. He expects that competition will only heat up and says services will also become even more important than before.

“It’ll be about what comes wrapped around with the device,” Bulat said. “These are preliminary numbers but we’re cautiously optimistic that things will start to turn around and there will be a better PC outlook hopefully by 2010.”

And no matter how severe our economic situation may get, Power says organizations will always have a need for technology in their businesses.

“Eventually customers will have to replace their aging equipment,” he said. “While we’ve seen a small downturn in the overall (PC) numbers, I think it’s mostly (because) of a shifting position to different types of (computing) products.”

As Edwards says, “It’s the old message that hardware’s still a viable business, but it’s only part of what’s necessary in a lot of businesses today.”