The Reason PC Sales Rose For the First Time In Over A Year

Companies are demanding upgrades and suppliers, in addition to addressing those needs, are building inventory in anticipation of tariff-driven price increases. JL

Michael Tobin reports in the Wall Street Journal:

Personal-computer shipments rose in the second quarter for the first time since last year, as businesses sought upgrades to technology with new Windows 10 software and a shortage in processors eased. “Most laptops and tablets are manufactured in China, and sales of these devices in the U.S. could face significant price increases if  tariffs are imposed and vendors do not take quick action to respond.”
Personal-computer shipments rose in the second quarter for the first time since last year, two research companies said Thursday, as businesses sought upgrades to technology with new Windows 10 software and a shortage in processors eased.

World-wide shipments totaled 63 million units for the quarter ended in June, up 1.5% from a year earlier, according to Gartner Inc. IT +0.44% Meanwhile, International Data Corp. said the global PC market rose 4.7% to 64.9 million units.
While both companies track sell-in numbers—units shipped to companies’ warehouses—rather than direct sales to consumers, much of the difference in their data comes from how each company defines PCs. Gartner excludes Chromebooks from calculations but includes so-called ultramobile premiums, such as Microsoft Corp. ’s Surface product, which IDC excludes.
Strong desktop shipments helped offset weakness in mobile PCs, said Mikako Kitagawa, a senior analyst at Gartner. The sector also benefited from the easing of a shortage in Intel Corp. processors, she said.
“The shortage mainly impacted small and midsize vendors as large vendors took advantage and continued to grow, taking market share away from the smaller vendors that struggled to secure CPUs,” Ms. Kitagawa said.
While Microsoft is expected to end support for its Windows 7 operating system in January, IDC analyst Linn Huang said the bump in sales for PCs isn’t expected to be as large as when it ended service on Windows XP.
Lenovo Group Ltd. , HP Inc. and Dell Technologies Inc. accounted for 64.1% of PC shipments in the quarter, according to Gartner, and roughly 67% based on IDC data. Both companies said Lenovo increased its share of the world-wide PC market from the prior year.
While the outlook for the processors is improving, Ms. Kitagawa said international trade conditions and potential tariffs add uncertainty to the market.
“Most laptops and tablets are currently manufactured in China, and sales of these devices in the U.S. could face significant price increases if the punitive tariffs are imposed and vendors do not take quick action to respond,” she said.
Gartner and IDC also provided slightly different readings on the U.S. PC market. Gartner said U.S. shipments fell 0.4% from last year’s second quarter to 14.5 million units. IDC, however, said the market returned to high-single-digit percentage growth as shipments rose for both desktop PCs and notebooks.
Beyond corporate customers’ purchases, vendors filled inventory ahead of back-to-school season and amid the threat of additional tariffs being placed on a range of U.S. consumer goods, according to IDC.