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The big PC sales slump is here and likely to stay

Press releases from highly regarded market research firms are, most of the time, risk averse and about as prone to making grand statements as a central bank. They usually make for pretty humdrum reading. That’s why Gartner’s recent report on third quarter worldwide PC shipments pointing to a historic slump caught our eye. 

The big takeaway, though Gartner is far too polite to put it in these terms, is that the PC industry is going through a hangover as the pandemic-related boom recedes. Demand has weakened and PC makers don’t know what to do with all the inventory they still have in their hands. 

The numbers tell the story. Overall, third quarter global PC shipments slumped 19.5% YoY to 68m units, the largest drop in more than two decades. No major manufacturer was spared the pain. Lenovo, HP, Dell, and Apple, the four largest global PC makers, posted YoY declines of 15.3%, 27.9%, 21.1%, and 15.6%, respectively, according to Gartner. 

In what seems like a classic overexpansion story, a lot of consumers had already bought a PC in the past two years and in times of rising inflation and interest rates would rather stick with the equipment they have. Companies, on the other hand, are being more tight-fisted amid growing inflation and geopolitical uncertainties and focusing their IT spending on other needs. 

The PC slowdown may extend into next year. As consumers become cautious and defer purchases, spending on IT devices is expected to decline 8.4% this year and 0.6% in 2023. Overall global IT spending, however, is projected to grow 5.1% next year powered by software and services as companies continue their digital transformation, Gartner says in a different report

The ripple effects are already being felt throughout the industry, at least modestly at the moment. Microsoft (a Verb client) is laying off 1,000 workers, still only less than 0.5% of its global workforce. Intel is also planning to slash thousands of positions amid the PC sales, just to name two prominent companies. 

Amid the gloom and doom, however, there is a silver lining. The supply chain disruptions that have dogged the industry for quite a while have finally eased.