How has COVID-19 changed the PC market?

IDC, Gartner and Canalys give conflicting opinions on the state of the PC market in Q1

Gartner, IDC and Canalys have each released their takes on how the global PC market has been affected by the COVID-19 pandemic, and how it is likely to recover.

Since the outbreak started in China in January, there have been mixed reports as to how the pandemic will affect PC supply and demand.

Large multinational resellers including Computacenter and Atea have reported unprecedented demand for PCs such as notebooks and laptops, as a result of many businesses and public sector bodies closing down their offices and asking their employees to work remotely.

Distribution analyst house Context meanwhile reported a massive spike in PC sales throughout western Europe during the first three weeks of March. Context said Europe's largest distributors enjoyed a 51 per cent year on year increase in notebook sales during the three-week period and a 38 per cent increase in total PC sales.

But while Context has already given its perspective on PC demand through distribution channels, Gartner, IDC and Canalys have recently published their own perspective from the vendors' side of the coronavirus crisis.

Gartner, IDC and Canalys all say that the PC market suffered steep declines in the first three months of the year due to the impact on vendor supply chains.

Canalys's assessment of the market was more positive than IDC's and Gartner's, claiming that PC shipments fell by eight per cent year on year in Q1 to 53.7 million units.

Meanwhile, Gartner's estimates are the most severe, quoting a 12.3 per cent decline in shipments to 51.6 million - that's a substantial four per cent lower than what Canalys claims.

IDC's figure sits roughly in the middle of the two at a 9.8 per cent decline to 53.2 million units.

Canalys said that Q1 marked the largest quarterly decline in PC shipments since the first quarter of 2016. Gartner meanwhile believes that Q1 was the worst quarter the market has seen since 2013.

All three firms say the coronavirus pandemic led to a drastic reduction in shipments during the quarter.

IDC says factory closures and labour shortages in China affected global supply. Canalys adds that, even before COVID-19 began to spread, vendors started 2020 with supply constraints, primarily caused by a shortage of Intel processors.

All analyst firms say that the pandemic led to a surge in demand for infrastructure to support remote offices and classrooms.

"The urgency of demand from both the consumer and commercial sectors, combined with the shortage of supply, meant device cost was no longer the key consideration. Instead, speed of supply was the most important factor," said Canalys.

What will the future look like?

All three analyst firms offered their take on how quickly the PC market will recover from the COVID-19 outbreak.

The commentary from each differs wildly, with IDC predicting that the pandemic will create long-term demand for remote working once the pandemic is over.

"Businesses that once primarily kept their users on campus will have to invest in remote infrastructure, at the very least, for continuity purposes. Consumers stuck at home have had to come to terms with how important it is to keep tech up to date. This should provide a steady, long-range tailwind for PC and monitor markets, among other categories," Linn Huang, IDC's research VP for devices and displays said in a statement.

Gartner's take is much less optimistic, claiming businesses will move IT budgets away from PC spending after the effects of COVID-19 have passed.

It said that Q1 underscores growing economic uncertainties that will mean businesses will continue to tighten PC spending, especially among small and medium-sized businesses.

"This uncertainty, coupled with the end of the Windows 10 upgrade peak, is causing businesses to shift their IT budgets away from PCs and toward strategic business continuity planning. We will start seeing businesses and consumers alike extending their PC life cycles on a more permanent basis as they focus on preserving cash," said Mikako Kitagawa, research director at Gartner.

Canalys' perspective leans more towards Gartner's gloomy outlook than IDC's slightly more upbeat one.

It says that, while PC products have been "flying off the shelves" during Q1, the market will suffer a steep drop in demand for the rest of the year as the economy faces a recession and businesses draw up new spending priorities.

Contrary to IDC, Canalys believes that even the sectors of the IT industry that have benefited from the pandemic, namely those offering products to support remote working, will also experience a slowdown, with many businesses having already kitted out home offices during Q1.

"A global recession has begun - businesses will go bankrupt, with millions newly unemployed. Even governments and large corporations will have to prioritize spending elsewhere. Many parts of the tech industry have benefited from the early part of this extraordinary lockdown period, but we expect to see a significant downturn in demand in Q2 2020. With factories now reopened and virtually up to full speed in China, PC vendors will face a challenge to manage supply chain and production correctly over the next three to six months."

Which vendors won, and which lost?

Vendors experienced global supply chain disruption throughout Q1 as factories closed down and workers were sent home during the quarter.

Gartner, IDC and Canalys report similar figures as to how each vendor performed, but there are one or two major discrepancies.

All three analysts have Lenovo, followed by HP then Dell shipping the most PCs during the quarter. Apple and Acer come in at number four and five for Canalys and Gartner, while for IDC it's Acer in the number four spot and Apple in at number five.

Dell was the only vendor in the top five to actually increase its number of shipments during Q1, according to Canalys and IDC - by 1.1 per cent.

Lenovo, HP, Apple and Acer all suffered shipment declines during Q1, Canalys and IDC claim. Apple was the hardest hit, with Canalys and IDC each reporting a 21 per cent drop in shipments.

Apple was hit hard by the coronavirus during February and was forced to shut down its factories in China as the contagion began to spread. It announced that it would fail to meet its quarterly revenue target as a result of the pandemic. HP and Dell have also made similar statements during the quarter.

HP suffered the second-highest declines at 13.8 per cent, followed by Acer and Lenovo, according to Canalys and IDC.

Gartner, however, has it slightly differently. Gartner claims Apple's shipments only fell by 6.2 per cent during the quarter. In another disagreement with its peers, Gartner does not think Dell's shipments grew in Q1, and instead argues that they declined by 2.2 per cent.