PC Demand Surges in Q1 2021 Despite Chip Shortage

Despite a growing chip shortage across the world, both Gartner and IDC reports suggest that surging demand for PCs in 2020 have continued into 2021 and in a phenomenal way. While Gartner says, the market recorded the fastest year-over-year growth in two decades, IDC too is rejoicing the rebound of PC market and says that a ‘fundamental shift’ has occurred in the PC market, which rarely saw growth before the COVID-19 pandemic hit.

Customer Demand Remains High

According to IDC, the global shipments of traditional PCs, including desktops, notebooks, and workstations up 55.2% year over year during the first quarter of 2021. A total of 84 million PCs were sold worldwide in 1Q21, and while this was a modest decline of 8% from Q4 2020, as IDC said, this was the smallest post-holiday-season drop since 2012, when sales declined by 7.5%.

The report also says that while PCs remain in extremely high demand, the growth rate benefited from the shortages faced in the first quarter of 2020 when the global pandemic began, resulting in an unusually favorable year-over-year comparison. The report also says that PC shipments reached 84 million worldwide in the first quarter of the year. IDC’s analysis showed a modest decline of eight perfect from the fourth quarter of 2020.

The reason for this trend, as the report points out is, the continued resurgence in the PC market, increases in average selling prices, growth in gaming, the need for higher performance notebooks in the enterprise, and an increase in demand for touchscreens within the education segment.

Gartner shows a more modest growth in worldwide PC shipments during the same time. Gartner said that the global PC shipments totaled 69.9 million units in the first quarter of 2021, an increase of 32% from the first quarter of 2020.

The market rebounded from a weak first quarter of 2020 to record the fastest year-over-year growth since Gartner began tracking the PC market in 2000.

While Gartner does not include Chromebooks in its traditional PC market results, Chromebook shipments grew by triple digits in the first quarter of 2021, compared to a year ago, with growth primarily driven by investment among educational institutions in North America. Including Chromebooks, the total worldwide PC market grew 47% year-over-year.

“This growth should be viewed in the context of two unique factors: comparisons against a pandemic-constrained market and the current global semiconductor shortage,” says Mikako Kitagawa, research director at Gartner. “Without the shipment chaos in early 2020, this quarter’s growth may have been lower. However, semiconductor shortages are now adversely affecting the supply chain once again, with shipment lead times for some PCs extending to as long as four months.

“While this may lead to lower shipment numbers, it is still reasonable to conclude that PC demand could remain strong even after stay-home restrictions ease. Moving forward, vendors and suppliers will be closely balancing the need to meet underlying demand without creating excess inventory,” Kitagawa adds.

Lenovo leads the way

As far as IDC report is concerned, of the top PC vendors, Lenovo led the bandwagon with 20,401 units being sold in Q1 2021 that represented 24.3% of the total market share. The company had sold 12,826 units in Q1 2020. The second spot was occupied by HP that sold 19,237 PC units in Q1 2021 and captured 22.9% of the market share. The third spot was occupied by Dell Technologies with 12,946 units of PCs being sold in Q1 2021. The company captured 15.4% of the market share.

The fourth spot was captured by Apple, which sold 6,692 units of PCs and captured 8.0% of the market share. The fifth spot was captured by Acer, which sold 5,837 units of PCs and captured 7.0% of the market share.

Gartner has a similar observation as the analyst firm noted that the top three vendors in the worldwide PC market remained unchanged from the previous quarter, with Lenovo maintaining the top spot by shipments. All of the top six vendors experienced double-digit growth, and all, except Dell, gained market share compared to a year ago.

According to Gartner, Dell experienced the slowest growth among the top six vendors, largely due to the company’s focus on the business PC market, which did not experience as much growth as the robust consumer PC market. In light of component shortages and increasing freight costs, the company also pulled away from low-margin consumer products more than ever before.

Regional growth matters

Gartner says that the U.S. market saw strong growth of 24.1% compared to a year ago. Echoing global trends, shipments of desk-based PCs continued to decline but were offset by a robust mobile PC market, with mobile PCs showing 49% growth.

“The positive results in the U.S. reflect a more optimistic economic environment in 2021 compared to 2020 when the market experienced multiple uncertainties due to the pandemic, as well as political and social unrest,” says Kitagawa.

In the first quarter of 2021, the EMEA PC market was in line with worldwide growth trends, experiencing 30.9% year-over-year growth to 22.4 million units. The ongoing and, in some cases, increased lockdowns across multiple countries continued to fuel demand for notebooks and Chromebooks to support remote learning and consumer entertainment.

The Asia Pacific PC market saw strong double-digit growth (37.6%) in the first quarter of 2021. In this market, healthy consumer demand and a rebound in desktops from business demands contributed to a strong market. In China specifically, the PC market experienced particularly high growth of 70% year-over-year, notes Gartner.

Will the good times continue?

The big question is whether the good times will continue once the pandemic is over.  IDC think for PC vendors there is a good chance this will be the case, at least for 2 -3 years.

“Unfulfilled demand from the past year has carried forward into the first quarter and additional demand brought on by the pandemic has also continued to drive volume,” says Jitesh Ubrani research manager for IDC’s Mobile Device Trackers. “However, the market continues to struggle with setbacks including component shortages and logistics issues, each of which has contributed to an increase in average selling prices.”

“There is no question when entering 2021 the backlog for PCs was extensive across business, consumer, and education,” says Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers.

“The ongoing shortages in the semiconductor space only further prolong the ability for vendors to refill inventory and fulfill orders to customers. We believe a fundamental shift has occurred around the PC, which will result in a more positive outlook for years to follow. All three segments – business, education, and consumer – are experiencing demand that we didn’t expect to happen regardless of many countries beginning their ‘opening up’ process,” says Reith.

He adds that component shortages will likely be a topic of conversation for the majority of 2021, but the more important question should be what PC demand will look like in 2-3 years.