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China claims top spot in global PC market

By Gao Yuan (China Daily)

08:14, May 03, 2013

China became the world's largest personal computer market for the first time on an annual basis last year amid weaker global demand, a research firm said, adding that the nation is likely to retain the position in the coming years.

The nation's PC shipments in 2012 hit 69 million units, surpassing the United States, which had annual shipments of 66 million, according to IHS iSuppli.

China's PC market is projected to grow 3 to 4 percent this year, it added.

The Chinese PC market has "distinct characteristics" compared with other countries as the country's rural market has great potential to fuel sales in the desktop PC segment, said Peter Lin, senior analyst for computer platforms at IHS.

While desktop PC shipments lagged notebook shipments around the world, each of the segments accounted for 50 percent of the sales in the Chinese market last year.

"The equal share of shipments for desktops and notebooks in China is unusual because consumers in most regions tend to prefer more agile mobile PCs, rather than the bulky, stationary desktops," Lin said.

The relatively large percentage of desktop PC shipments in China is because of huge demand in the country's rural areas. These consumers tend to prefer desktop PCs, said Lin.

Earlier this year, the government announced plans to boost infrastructure construction in rural areas over the next decade. The initiative, with a total investment estimated at 40 trillion yuan ($6.5 trillion), is expected to lift personal incomes in rural areas.

According to Lin, the PC market will benefit from the massive investment plan, but shipments of desktops will not surpass those of notebooks until 2014.

In addition, China's commercial market was able to drive about half of the PC shipments, IHS said.

Like in the rest of the world, PC demand in China remains sluggish as consumers migrate to mobile devices such as smartphones and tablets.

Global PC shipments totaled 76.3 million units in the first quarter, a decline of nearly 14 percent year-on-year, industry consultancy IDC said in April. The extent of the contraction marked the worst quarter since the company began to release the quarterly PC shipments figure in 1994.

The result also marked the fourth consecutive quarter of year-on-year shipment declines, it said.

Gartner Inc, a US-based research firm, said that the worldwide traditional PC market is expected to decline 7.6 percent in 2013 because customers are starting to spend more time on mobile devices.

"As consumers shift their time away from their PC to tablets and smartphones, they will no longer see their PC as a device that they need to replace on a regular basis," said Carolina Milanesi, research vice-president of Gartner.

This is a reflection of a long-term change in user behavior rather than a temporary trend induced by the austere economic environment, said Gartner.

Hit by sluggish worldwide PC demand, global manufacturers are vigorously looking for future business models for the post-PC era.

The world's No 1 PC vendor, Hewlett-Packard Co, is betting on its enterprise software service sector to keep its head above water. The company's worldwide shipments dived more than 23 percent year-on-year in the first quarter, IDC said in April.

Lenovo Group Ltd, China's top PC maker and the world's second largest, said it's shifting the focus to mobile devices although PCs remain the biggest profit generator for the company.

Dell Inc, the third-largest vendor by shipments, also said it will beef up its software arm after Michael Dell, its founder, said he will take the company private.

"The industry is going through a critical crossroads, and strategic choices will have to be made as to how to compete with the proliferation of alternative devices and remain relevant to the consumer," said David Daoud, research director at IDC's personal computing department.

"Vendors will have to revisit their organizational structures and market strategies, as well as their supply chain, distribution, and product portfolios in the face of shrinking demand and looming consolidation," he said.

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