Quarterly Results Indicate Slowdown of PC Market Meltdown
Is the PC market stabilizing? The latest earnings results may point to a leveling off of the plummeting sales suffered by chipmakers in recent years.
A recent report by International Data Corporation (IDC) said it was optimistic that after five years of decline, the PC market would rebound in 2017. The rebound, said IDC, would be caused in part by consumers upgrading their systems and investing in mobile devices.
While 2016 was still an undoubtedly tough year for the PC market, with a 5.7 percent year-over-year (YOY) decrease in overall shipments, the latest quarterly results indicate a slowdown in the decline. Worldwide PC shipments declined by 1.5 percent in the fourth quarter. This continues a trend of stabilization seen in the second and third quarters, which dropped 4.5 percent and 3.9 percent, respectively.
“The fourth quarter results reinforce our expectations for market stabilization, and even some recovery,” Loren Loverde, IDC vice president of personal computing trackers and forecasting, said in a statement. “The contraction in traditional PC shipments experienced over the past five years finally appears to be giving way as users move to update systems.”
Last week, Microsoft CEO Satya Nadella told analysts that he thinks the consumer PC market’s long decline is stabilizing, saying that gamers are injecting much-needed revenue into the high-end computer market.
Nadella also said that in contrast to numbers reported elsewhere, Windows 10 adoption is increasing, which would drive enterprise sales. Microsoft claimed a 5 percent increase in revenue from sales of Windows by other PC makers last quarter, which shows an “improving commercial PC market and enterprise demand,” according to Nadella.
“I think the overall adoption cycle of Windows 10 in the enterprise is perhaps the best we have seen for any new release of Windows,” Nadella said.
An IDC report released last week said that though Windows 10 did not drive extensive renewals last year, increased demand for Microsoft notebooks targeting enterprise mobility needs drove strong numbers in the second half of 2016.
Similarly, Intel last week reported better-than expected quarterly revenue and profit. The company posted a 9.8 percent rise in total revenue, driven by both PC and data center services sales.
Fourth-quarter revenue from Intel’s data center business rose 8.4 percent, reflecting the company’s increased emphasis on this business unit to help offset its losses in the PC market. But in a happy turn of events, revenue from traditional PC sales rose 4.3 percent.
“The fourth quarter was a terrific finish to a record-setting and transformative year for Intel,” Chief Executive Brian Krzanich said in a statement.
Finally, on Tuesday, Advanced Micro Devices (AMD) also announced it beat analyst expectations. While the chipmaker didn’t report quarterly profit, it did post a loss that was smaller than expected. It’s the sixth quarter in a row AMD has beat analyst expectations. It also gave a strong current-quarter revenue forecast.
AMD’s graphics chips have a strong foothold in gaming consoles and other high-performance processors. Sales for its PC processor business unit rose nearly 28 percent. The Sunnyvale, Calif.-based company has said that its next product, the much-anticipated Ryzen PC processor, will be released in the first half of this year.
Whether we have gamers or notebooks to thank, traditional chipmakers may be cautiously optimistic. We’re not out of the woods by any means, but we might be seeing the end of the out of control death spiral of the last few years.