Systems and PC hardware

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Market analysis

The Systems and PC Hardware subsector in Q4 2015 reported year-over-year revenue decline of 2.9% and quarter-over-quarter revenue growth of 8.7%. The year-over-year decline was mostly due to HP Inc (-12%), Xerox (-9%) and Lenovo (-8%).

Total worldwide PC shipments stood at 75.7 million units in the fourth quarter of 2015, an 8% decline from the fourth quarter of 2014. Holiday sales failed to boost overall PC shipments, a continuation of the shift in consumers’ PC purchase behavior. On the business side, Windows 10 received positive reviews, but as expected, Windows 10 migration was minor in the fourth quarter as many organizations were just starting their testing period.1

PC shipments decreased in all regions of the world exacerbated by currency devaluation issues in. EMEA, Japan and Latin America. As a result, their markets fell by nearly 10% in 2015. Though Lenovo registered a worldwide PC shipment decline for the third consecutive quarter, in the fourth quarter 2015, shipments declined less than the industry average, thereby extending Lenovo’s lead in the market. It accounted for 20.3% of worldwide PC shipments in the fourth quarter of 2015.1

On the business side, it is predicted that 50% of enterprises will have started Windows 10 deployments by January 2017. Several factors are driving migration from Windows 7 to windows 10, including awareness of the end of support for Windows 7 in January 2020, the strong compatibility with Windows 7 applications and devices, and a pent-up demand for tablet and 2-in-1 device rollouts. The net result is that many enterprises are planning to begin pilots for Windows 10 in the first half of 2016, and to broaden their deployments in the latter part of the year.2

While the rising US dollar had a negative impact on 2015 results of US multinationals operating in this sector, the headwinds are expected to diminish in 2016 and US multinationals are expected to achieve a 5% growth rate, though the devices market (PCs, ultramobiles, mobile phones, tablets and printers) is forecast to decline 2% in 2016. The combination of economic conditions preventing countries such as Russia, Japan and Brazil from returning to stronger growth, together with a shift in phone spending in emerging markets to lower-cost phones, along with a lack of quick adaptation to tablets in these regions will lead to the stall in demand. Ultramobile premium devices are expected to drive the PC market forward with the move to Windows 10 and Intel Skylake-based PCs.1

Banking on the high demand for portable computing devices, InFocus introduced Kangaroo, the US$99 Mobile Desktop and World's Smallest Personal, Portable PC. It shrinks a powerful Microsoft Windows 10 PC into a form factor that goes anywhere and works with any screen. By connecting Kangaroo to a mouse, keyboard and monitor or to an iPad, a user can access all Windows 10 desktop programs and files.3

Effective 1st November 2015, Hewlett-Packard split its enterprise products and services division into the publicly traded company Hewlett Packard Enterprise.4 Subsequently, Hewlett-Packard renamed itself to HP Inc. and continues to trade publicly under the ticker ‘HPQ’. 

 

1Gartner, Jan 2016
2Gartner, Nov 2015
3PRnewswire.com, Oct 2015
4Fortune, Oct 2015