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The worst may be over for Canadian PC shipments

New IDC Canada data shows signs for optimism, but also indicates a changed PC dynamic will emerge

The second quarter was a disappointing one for Canadian PC shipments, but according to IDC Canada there is some reason for optimism as we move toward the end of 2009. However, the PC market that emerges from the downturn will look different from the one that entered it.

According to statistics from IDC Canada, the overall Canadian client PC market (which includes desktops and portable PCs but excludes x86 servers) saw unot values drop 14.6 per cent in Q2, compared to the same quarter a year ago, a decline of 12 per cent from Q1. The 1,189,273 units shipped was the lowest total since Q2 of 2006.

Breaking down the numbers, there was positive news in the portable PC space, where shipments grew 9.9 per cent over the year ago quarter, shipping 728,658 units. The weakness in overall shipments was driven by spiraling desktop shipments, which fell 36.8 per cent over the year ago quarter.

While the numbers are bad, IDC Canada notes the second quarter is traditionally the weakest of the year for PC shipments, and signs of a bottoming-out and stabilizing of the rate of decline, the worst may well be over.

“There’s definitely light at the end of the tunnel. We do expect things to get better in Q3,” said Tim Brunt, senior analyst, personal computing and technology for IDC Canada. “It’s a tough one though. People may be waiting for the new Microsoft OS (Windows 7) and that may affect the timing of buying decisions on the consumer side.”

When Windows 7 is released late in the year, however, Brunt said he expects it to be a strong catalyst to motivate buying decisions and lead a recovery of shipment numbers.

The client PC market that emerges from the downturn will be different than before, said Brunt. Desktops, in particular, are unlikely to return to their previous numbers. Desktops and laptops are now price and feature comparable, but desktops lack the portability of a laptop and require peripherals as well.

“Right now we’re seeing a big shift as people try to make their desktops last longer and, when they come up for replacement, shifting to a notebook or a mini-notebook,” said Brunt. “It’s happening in the enterprise space as well although there’s still area where a desktop is the preferred form factor, where security or ease of replacement parts is a concern.”

Within the portable space, growth is being led by a strong demand for ultra-portable devices or mini-notebooks. Some 114,560 mini-notebooks were shipped in Q2, good enough for year-over-year growth of 219.6 per cent. Interestingly, 25 per cent of those devices shipped into the consumer space.

While mini-notebooks are generally budget-priced with razor-thin margins, Brunt said he sees more opportunity for the channel in ultra-portables than he does in the portable segment.

“Customers are also buying an external keyboard, a mouse, external storage and backup, all the things that mini-notebooks, which are designed for portability, are missing,” said Brunt. “Those are all options that are good add-on and up-sell opportunities which can create more margins for the channel.”

Breaking the Q2 numbers down by vendor, HP remained the market leader with a 22.1 per cent share, despite shipping 25.3 per cent less units year over year. Dell was only slightly behind, at 20.7 per cent of the market. Strong growth in portable shipments helped Apple break into double-digits, at 10 per cent.

In the portable space, Acer led with 21.4 per cent of the market, thanks to its mini-notebook offerings, which hold a dominating 57.5 per cent of the ultraportable space.

Finally, the SMB space is showing signs of recovery with a 23.6 per cent shipment increase in the quarter, year over year, following a pullback in Q1.