PC Industry and Samsung PC in USA

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[Trends] PC Industry and Samsung PC in USA

Industry media and research companies point toward the continuous decline in sales and shipments as the biggest overarching trend in the U.S. PC industry. According to Gartner, there was an 8% fall in shipments in Q4 2017 compared to Q4 2016. However, Gartner's reports don't consider Chromebooks, the best performing category, as PCs. The decline can mostly be attributed to the slump in sales of notebooks and desktops. This leads to introducing exclusive features and increasing prices, which is slowly transforming PCs into a niche market. Overall, despite the weak demand, consumers are increasingly satisfied with their PCs, which, according to Digital Trends, can be attributed to the introduction of ultra-thin laptops and 2-in-1 solutions. In 2016, Samsung saw 6.4% year-on-year increase in approval rate, more than any other vendor bar Acer.

DECLINE IN SHIPMENTS

Business Insider reported that Q2 2017 PC shipments were the lowest in ten years, with the U.S. fall being much sharper than global (5.7% compared to 4.3%). The trend continued in Q3, with Gartner estimating that the U.S. shipments declined by 10.3% compared to Q3 2017 and carried onto Q4 when there was a decline of 8%.

According to their reports, low demand in the education sector and overall weak consumer demand are contributing the most to this slump. However, please note that Gartner doesn't include Chromebooks in the results. The company thinks that their target market is too different.

To compare, IDC, which counts Chromebooks toward the overall result, gives a slightly more optimistic outlook on the industry. While overall, they confirm that there was a decline in shipments in Q3 2017 (the most recent period for which the data is available), they estimated it at only 3.4%. According to them, the fall can be attributed to the growth in other mobile devices and inventory management.

WEAK CONSUMER DEMAND

As mentioned in the previous section, weak consumer demand is one of the main reasons behind the drop in sales. According to ZDNet, people are unlikely to buy new models because the innovations aren't consumer-oriented and the PCs they already have are long-lasting. They also think that more and more people choose not to own a PC at all, with around 20% millennials not having one.

Those observations are confirmed by the results of the online survey by Fluent. According to it, only 26% of the time spent on devices is on desktops and laptops combined (compared to 55% on smartphones). As a result, as noted by Gartner, even in periods of high consumer confidence, they are more likely to shop for smartphones or trending gadgets.

PCS BECOMING A NICHE MARKET

The Verge observes that with declining sales, PCs are starting to become niche products. Since vendors can't achieve satisfying results in total sales, they are trying to increase the per-unit price and the built-in-profit margin. Apple's pricing strategies are the most obvious example of this trend, accompanied by Microsoft Surface Studio and Razer Blade Pro. However, the article notes that such strategies can't be implemented by pure hardware providers, like Acer or Asos.

A similar observation is made by Gartner. According to their Q3 2017 report, while business PC demand isn't declining yet, it may soon start to. Increased prices could make PCs unavailable to SMBs. However, their report cites component shortages as the main reason behind them.

BEST AND WORST PERFORMING CATEGORIES

If we categorize them as PCs, Chromebooks are by far the best performing category. According to IDC, they are the biggest source of optimism. While they were initially only widespread within education, they are starting to appeal to financial services and retail, among other sectors. In 2016, Chromebooks shipments grew by 38%. While the figure is global, the article in the PCWorld suggests that they are most popular in the U.S.

According to IDC, the overall decline in the market can be attributed to the slump in notebook sales, though the exact figure isn't provided. Q3 2017 was also "another declining quarter" for desktops, but the sales were better than expected.

POSITIVE CONSUMER SENTIMENT

Despite weak demand, overall, consumers are satisfied with their PCs. According to the 2016 "Household Appliance and Electronics Report" by ACSI, satisfaction raised from 77% in 2015 to 78% in 2016 (the numbers are rounded, but it grew by 1.3%). Please note that the overall figure includes tablets, though ACSI's explanation indicates that they account for a small portion. The report also notes that consumer satisfaction increased for laptops and desktops alike. Digital Trends thinks that 2-in-1 solutions and ultra-thin laptops contributed to consumer sentiments surrounding the former.

The report also lists factors that are most important for consumers, which include the overall design of the device, the quality of graphics and sound, the ease of operations, the availability of software and apps, and the availability of accessories.

CONSUMER SENTIMENT AROUND SAMSUNG

After reviewing a plethora of articles in the industry media related to consumer sentiment surrounding Samsung, I concluded that the vast majority of them focus on smartphones. The most valuable insight I found came from the 2016 "Household Appliance and Electronics Report" by ACSI, which I mentioned above. According to it, the approval rate of Samsung PCs increased by 6.4% year-over-year. The report also mentions that Apple and Samsung were most successful in winning over customers in recent years (in the PC category). Please refer to the above section for factors that surveyed consumers valued the most.

CONCLUSION

In conclusion, the major overarching trend in the U.S. PC industry is the continuous decline in shipments. They decreased by 8% in Q4 2017, compared to Q4 2016. In Q2 2017, they were the lowest in ten years. The decline can be attributed to the weakening consumer demand, influenced by the growing popularity of smartphones, and the increasing longevity of PCs. Chromebooks are the best performing category, though Gartner's analysts (as opposed to the ones from IDC) don't consider them a part of the PC market. The sales of notebooks and desktops are in decline. Decreasing sales and component shortages force vendors to increase prices, which is starting to turn PCs into a niche category. Sentiments surrounding Samsung PCs are positive. The approval rate increased by 6.4% in 2016.

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