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October 10, 2023updated 11 Oct 2023 1:57pm

Expect more ‘pain’ in the PC market as sales continue to fall – is AI the saviour?

It's a gloomy market for PC vendors, IDC says. But is artificial intelligence a route back to growth?

By Matthew Gooding

The number of new PCs shipped around the world declined 7.6% in the last quarter according to research from IDC. The analyst company is predicting more “pain” for vendors in the coming months as demand for hardware among businesses and consumers continues to slow, though it says the maturing artificial intelligence market and demand for AI PCs could hand manufacturers a boost.

Sales of PCs are continuing to decline, IDC reports. (Photo by OlegRI/Shutterstock)

IDC’s worldwide personal computing device tracker research shows that 68.2 million PCs were shipped in the three months to the end of September. This was down from 73.8 million in the same period of 2022, and 87.3 million for Q3 2021.

The global economic slowdown has put the brakes on spending on PCs for many organisations, after they invested heavily during the Covid-19 pandemic to cater for the mass transition to remote working. Though most UK tech leaders surveyed by Nash Squared for its most recent Digital Leadership Report said they were expecting IT budgets to increase this year, spending is being funnelled into areas such as boosting cybersecurity and data analytics capabilities, as well as recruiting and training staff, rather than hardware.

Major PC vendors hit by sales slowdowns

All this is bad news for PC manufacturers, and four of the top five vendors reported declining sales globally, with only HP bucking the trend. IDC puts this figure down to “normalising of inventory”. Apple suffered a particularly heavy decline, but this is because it was particularly productive in Q3 2022 as its factories rebounded after Covid-19-related shutdowns.

The gloomy picture is likely to persist for some time to come, according to Jitesh Ubrani, research manager for IDC's mobility and consumer device trackers. "The PC industry is on a slow path to recovery as a device refresh cycle and end of support for Windows 10 will help drive sales in the second half of 2024 and beyond," Ubrani says. "In the meantime, the PC industry will unfortunately experience more pain."

While sales decline, PC manufacturers are also coming to terms with the impact of US export controls on China, which place restrictions on Chinese components being used in machines sold in the US and elsewhere. As reported by Tech Monitor, this has led to Dell moving away from using China-made chips, while Apple has moved production of Macbooks from China to Vietnam, and HP is manufacturing some of its devices in Mexico and Thailand.

The "slowness" in the industry is "giving the supply chain an opportunity to explore procurement and production options outside China," Ubrani said. "This will likely remain a key issue going forward, second only to the advancement of AI within PCs."

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The opportunity in AI PCs?

IDC is optimistic that AI PCs will be an opportunity for vendors to grow their income. These are machines capable of running AI models locally, rather than sending workloads to the cloud. Intel unveiled a new PC processor, Core Ultra, last month which it says is capable of powering such systems, while Qualcomm has also demonstrated its hardware can run AI systems on a Windows PC.

Generative AI could "be a watershed moment for the PC industry," said Linn Huang, research vice president for devices and displays at IDC. "While use cases have yet to be fully articulated, interest in the category is already strong."

He added: "AI PCs promise organisations the ability to personalise the user experience at a deeper level all while being able to preserve data privacy and sovereignty. As more of these devices launch next year, we expect a significant boost to overall selling prices."

Read more: Will OpenAI really build its own chips?

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