UK PC Market Suffers Worst Decline in Five Quarters


Tablets and smartphones make gains, while sales of desktops and laptops slump

In the fourth quarter of 2011, PC shipments in the UK totalled 2.9 million units, a decline of 19.6 percent when compared with the equivalent period in 2010.

This was UK’s fifth consecutive quarterly shipment decline, and also its worst, says a report by IT research and advisory firm Gartner.

Doom and gloom

Overall, PC shipments in Western Europe amounted to 16.3 million units in the fourth quarter of 2011, a 16 percent decline from last year. The PC markets of Italy, Greece, Portugal and Spain were hit particularly hard, with year-on-year PC demand shrinking by 30 percent or more.

Although total worldwide IT spending is predicted to rise 3.7 percent in 2012, this current slump is caused by a combination of grim economic conditions and competition from the new generation of computer platforms.

“Despite aggressive pricing and special holiday deals for PCs, consumers’ attention was caught by other devices, such as smartphones, media tablets and e-readers,” said Meike Escherich, principal analyst at Gartner. “Even though we saw a drop in prices, consumer PC shipments could not match the levels of previous years.”

While professionals still value power and reliability of PCs, it seems that consumers are increasingly embracing touchscreens and mobile technology. According to the report, PC shipments in the professional segment declined 13.5 percent in the fourth quarter of 2011, but the consumer segment suffered a bigger decline, falling 18 percent. Austerity measures hitting the education sector were quoted as one of the reasons for weakness of the professional market.

Just several years ago, netbooks were hailed as the new stage in computer evolution and in the third quarter of 2009 they represented a third of the UK’s total mobile PC market. Two years on, and the ultraportables show more than 50 percent decline in shipments. It is possible that many vendors are now shifting away from these devices, effectively replacing them with tablets.

But there is another type of computer which offers a glimmer of hope for the PC manufacturers. “Vendors face a long, uphill struggle to regain the interest of consumers. The introduction of Ultrabooks in late 2011 is desperately needed,” said Ranjit Atwal, research director at Gartner.

King of the disappearing hill

HP maintained the leading position for PC shipments in Western Europe, and even increased its lead over Acer with 22.2 percent market share in fourth quarter of 2011. Asus won several major deals in the retail channel, which raised its total and kept it in third spot, while Dell struggled with slow demand from large organisations and the public sector, keeping its market share at 10.5 percent. Lenovo’s growth, partly due to its acquisition of Medion in Germany, helped it secure the fifth position with 8.7 percent share.

In the UK, four out of five biggest PC manufacturers performed poorly. Only Apple achieved growth, which consolidated its hold on the fourth position, behind HP, Dell and Toshiba.

As a result of the  floods in Thailand, the impact of the hard-disk drive shortage appeared to be minimal in the fourth quarter of 2011, with local vendors feeling most of the effects. “If general market conditions continue to deteriorate, we expect hard-disk drive shortages to be just one of many contributors to overall PC market contraction in 2012,” said Ms. Escherich.

Meanwhile, smartphone and tablet sales are going through the roof. During the fourth quarter of 2011, smartphone sales had surpassed those of PCs for the first time, and this trend is expected to grow, according to research firm Canalys.

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