You'd expect the huge increase in work-from-home (WFH) employees to translate into an equally huge increase in the number of PCs sold.
You might expect it, but you’d be wrong.
To be sure, the coronavirus pandemic has many people suddenly working from home. And that’s likely to continue. A recent Gartner survey found that nearly half (48%) of employees will likely work from home at least part of the time after the pandemic, compared with 30% before.
All those home-workers need robust PCs and networks. Yet so far, that isn’t translating into a big sales pop. In fact, among the top 3 PC suppliers, HP and Lenovo recently reported PC sales declines, while only Dell reported an increase, and that just a meagre 2%.
What went wrong?
So where’s the disconnect between more people working from home, and fewer PCs being sold?
Naturally, it’s a bit more complicated than that. HP, for example, actually had a good April. During just that one month, HP sold half of all the PCs it sold in its entire Q3.
Unfortunately, that quarter was overall a disappointment. HP’s Q3 revenue from desktop and laptop sales dropped 7%.
Turns out that while many WFH employees needed new, beefier PCs, HP’s supplies were limited due to CPU shortages. That now seems to have been sorted, according to the Wall Street Journal. PC sales in HP’s Q3 could be stronger, and with adequate supplies to fill demand.
Lenovo a no-go
Over at Lenovo, cause-and-effect was a lot clearer and simpler. As CRN reports, Lenovo’s supply was limited because the company shut down for a time its PC factory in Wuhan, China. That city, of course, is the presumed origin spot for the novel coronavirus.
According to this line of reasoning, Lenovo simply couldn’t produce enough hardware to meet demand.
The numbers show it. For Lenovo’s Q4, the company’s PC and smart device unit reported a 4% revenue drop. Its mobile business unit suffered a much worse revenue drop of nearly 50%.
Overall, Lenovo had a weak Q4. Total revenue fell 10% year-on-year, while net income plunged by 64%.
Dell looks like the exception that proves the rule, at least on the client-computing side. For the company’s Q1 ending May 1, its client solutions group enjoyed a 2% revenue boost.
Dell’s commercial PC sales in the quarter — that’s sales to businesses — rose by an even greater 4%.
Drilling down, Dell reported that its Latitude notebook sales for Q1 rose 37%. Nice!
The big question is what the rest of 2020 will look like. The short answer is that nobody knows.
That includes Intel. The company in Aprll took the unusual step of withdrawing its financial guidance to investors for the second half. At the time, the chipmaker said the 2H:20 outlook was simply too uncertain to predict.
That hasn’t stopped everyone. Gartner now predicts that worldwide shipments of PCs, tablets and mobile phones will decline this year by nearly 14%. PC shipments alone, it adds, will this year drop by 10%.
Similarly, market watcher IDC now expects PC unit shipments to Europe, the Middle East and Africa (EMEA) over the next 5 years to contract on average by 0.1% a year.
IDC says the downturn will be a direct result of the pandemic-driven recession. Small and midsize businesses will be hurt worst by the recession, IDC expects, and they’ll respond in part by cutting back on their IT spend.
The silver lining? Gartner says it could have been worse. One of the company's research directors, Ranjit Atwal, says that while shipments of notebooks, tablets and Chromebooks aren't forecast to grow this year, at least they'll decline slower than the PC market overall.