The PC industry appears to be defying gravity. Unit shipments are down, yet hardware suppliers are reporting strong revenue growth. How is that possible?
The answer lies in the ASP, short for average selling price.
ASPs across the entire PC market will rise this year by 2.6%, expects IDC. The market watcher, in a report released today, says this ASP increase will be enough to keep sales flat, even as unit shipments fall by an expected 3%.
The power of high ASPs
On the business side of the PC market, sales revenue should actually rise this year, IDC predicts. That’s because many businesses are modernizing their tech portfolio with Windows 10-based ultraslims and 2-in-1s.
Both form factors have retail prices considerably higher than those for plain-vanilla desktops and laptops.
For example, Lenovo’s ThinkPad Yoga, an ultraslim 2-in-1 device for business, has a starting retail price of about $1,020. By comparison, Lenovo’s more basic T Series laptop, also designed for business, starts at a much lower $650.
Even with those starting retail prices, Lenovo could bring in almost as much money selling just three ThinkPad Yogas ($3,060) as it would selling five entry-level T Series laptops ($3,250). That’s the power of high ASPs.
ASP power is also propelling desktop revenue for HP. The company recently reported that unit shipments of desktops in its most recent fiscal quarter increased by 6%. Yet revenue from those sales increased by a slightly higher 7%. The only way that’s possible is with higher ASPs.
2 growth areas
Don’t expect the PC situation to change anytime soon. IDC now expects PC unit shipments worldwide to drop between now and 2023 by an average of 1.6% a year.
However, dig a bit deeper, and you’ll find two areas of growth. As the following table shows (courtesy of IDC), the market watcher expects unit sales of both 2-in-1s and ultraslim notebooks to rise over the next 5 years:
Other formats, as the table above shows, will be hurting. Shipments of desktops, slate tablets and traditional notebooks are all forecast to drop over the next five years.
On the consumer side (not including gaming), the future doesn't look that bright, either. IDC predicts consumer-PC unit shipments this year will drop by a serious 6%. Things should improve in the next few years, but by only a little. Looking ahead through 2023, IDC predicts consumer-PC shipments will fall by an average of 2.7% a year. That's better than 6%, but still not so good.
What’s behind the shipment drop? Consumers, just like business users, are abandoning traditional laptops and slate tablets for sleeker ultraslim laptops, 2-in-1s — and smartphones.
“Smartphones continue to be top-of-mind for consumers when it comes to new-device purchases,” says IDC mobile-device analyst Ryan Reith. “The rapid adoption of large-screen smartphones has resulted in consumers doing less on their PCs or tablets and more on their phones.”
So if you resell PCs, don’t get caught short in a shrinking market. Emphasize the hardware today’s buyers want — 2-in-1s and ultraslims. And raise those ASPs.