Martin Hingley's Blog

PC Market Q310 Highlights

• Intel warns revenues will be $11B in Q3 2010, up or down by $200 m
• AMD warns Q3 2010 revenues will be down one to four percent on Q2 2010
• The Q3 PC market value will be similar to that in Q2
• The disruption of the credit crunch continues
• The PC market in 2010 will grow by just 3% to $289 b, under-performing many market forecasts

Predicting PC Market Seasonality Is Still Problematic

Both Intel and AMD have issued warnings on their Q3 2010 revenue forecasts in the last few weeks. We thought it would be a good idea to look at how these expectations will affect the worldwide PC market in coming quarters and make some predictions about the overall 2010 forecast.

On the whole the chip manufacturers’ results follow the PC hardware market closely (see Figure 1 in which we’ve plotted the quarterly growth from 2008 onwards). The credit crunch at the end of 2008 forced the PC market into a nosedive from which it recovered strongly from the end of 2009. One major problem for business planners in this sector is seasonality. It’s important for those manufacturing components, assembling systems, ordering shipments, distributing and selling to end-users to have an accurate picture of volumes coming months and quarters. The signs from Intel and AMD appear to indicate that there was some over-stocking of components in the run up to the all-important ‘back to school’ period.

What Will Lower Chip Revenues Mean For The PC Market Forecast In 2010?

We’ve described our methodology below. Our main findings are that the PC hardware market will grow in 2010, but not by the substantial amounts that Q1 and Q2 results would suggest. It’s natural that growth rates will decline when the absolute values start to be compared with periods of massive growth in 2009.

Overall we believe that the PC market will grow by just 3% worldwide in 2010, reaching $289 billion (see Figure 2). This compares to a 7% decline in 2009 and a 9% increase in 2009. The $82 billion size of Q4 2009 will not be equalled in 2010, when the total value looks set to be some $7 billion lower.

Strong PC Brand Activity Needed In An Over-Stocked Market

In absolute terms PC brands saw very positive growth to June 2010 (see Figure 3). Dell has been catching up with the market leader HP, while Apple and Lenovo look perhaps set to overtake Acer and Lenovo given their recent historical growth.

As we face a market contraction in coming months so vendors will no longer be able to rely just on the strength of the rebound in demand following the credit crunch. ITCandor believes that those vendors which invest in strong branding activities are likely to do better in a market with less growth.

Some Notes On Definitions And Methodology

We took Intel and AMD’s new forecasts for Q3 2010 (adopting their most negative assumptions), adopted lower growth expectations as well for Q4 2010. Taking the ratio these values were of the PC market historically we then assumed that they would fall slightly in Q3 and Q4. The PC market shown in these charts is actually the total of PC brand hardware revenues and excludes components such as chips unless sold through retail to end-users; neither Intel nor AMD have a significant market share of the market thus defined.

Some Conclusions – A Bumpy Ride Ahead In The PC Market

We’ve noted elsewhere that the affects of the credit crunch are continuing in the ITC market – the PC market is a clear example. The likelihood that there was little, if any, sequential growth in Q3 demonstrates shows that seasonality has not yet returned. While we have taken a relatively negative approach to forecast the final quarters of the year, it seems certain that the PC market will not return the strong growth predicted by many in the recent past.

Do you agree with a worsening outlook for PC sales? How do you forecast in a disrupted market. As always please let us know by commenting on this post.

Filed under: AMD, Intel, PC, Processor Tagged: | Acer, AMD, Apple, Dell, HP, Intel, Lenovo, PC Market, Samsung