IDC Canada is reporting a strong rebound for the overall Canadian Client PC market in the third quarter of 2009 on the strength of strong demand for netbooks, as well as sharp price cuts by the major PC vendors. Desktop PC sales, however, continue to drop dramatically.
According to IDC, in Q3 unit volume increased by 3.6 per cent over Q3 of 2008, and increased by 48.3 per cent over what was termed a weak Q2 of 2009. In raw numbers, some 1,754,213 units were shipped in Q3, the highest figure on record in Canada according to the analyst firm.
That doesn’t mean retailers and partners are making much money however, with much of the growth coming in low-margin business such as netbooks, and coming due to aggressive pricing action by the PC vendors.
More than 250,000 netbooks shipped in the quarter, which is more than was shipped in the first two quarters of 2009. Netbooks helped fuel growth in the mobile segment, with portable PC shipments growing by 26.3 per cent, year over year, to perform ahead of expectations with 1,233,417 units shipped.
However, on the desktop side it was another story. While the desktop segment beat expectations, the 530,796 units shipped was down by 27 per cent over the same period one year ago.
Tim Brunt, senior analyst with IDC Canada, said much of the growth in shipments can be attributed to pricing, and some pretty hefty price drops in Q3. The price of the average desktop dropped from $1033 in Q2 to $807 in Q3. Netbook prices dropped from $419 to $369, and the average notebook price dropped from $906 in Q2 to just $681 in Q3.
“Everyone is clearing out inventory because of Windows 7, that’s a big factor,” said Brunt. “No one wants to be left with older inventory, particularly in the face of a new OS.”
Still, Brunt said even with Windows 7 now launched and the new line of PCs in stores, he doesn’t expect pricing to go back up in the near-term.
“We’re kind of at bottom right now. Certainty we’re at the lowest point, and vendors have some great products out there so it looks like a great time to buy now,” said Brunt.
However, with the increasing popularity of netbooks, Brunt does expect prices to begin creeping back up as users opt for netbooks with more powerful processing and RAM choices to allow them to do more with the device, therefore driving the average selling price up.
For the channel, however, it does mean the already razor-thin margins in areas such as netbooks being squeezed even tighter by pricing pressure. Brunt said the margin potential there is in peripheral sales, noting he has even heard of some people purchasing a 42” LCD display to double as an external display.
Also, while all-in-one PCs have also seen price drops in the quarter, this newer market space still retains margin potential and is attracting attention from customers for use cases such as kiosks, displays and reception desks, as well as the education sector.
Indeed, all-in-ones were the one bright-spot in a desktop PC market that continues to trend downward. Brunt said IDC sees that decline continuing about another year before stabilizing at rather low levels.
On the vendor front, the Q3 numbers were driven by strong performances by both Hewlett-Packard Co. and Acer Inc. HP held onto top spot, growing its market share to 26.5 per cent, including 26 per cent of desktop shipments and 26.7 per cent of mobile shipments to reclaim the lead in that category. Acer moved into second overall with 19.7 per cent on strong netbook shipments, while Dell Inc. had 19.7 per cent overall for third place, but fell to fourth on the portable space with 12.6 per cent market share.
With most vendors having taken delivery of product on Q3 in anticipation of Windows 7 and the holiday season, Brunt said the Windows 7 bump has largely already been seen. However, he said IDC is still expecting a relatively strong Q4.