The worldwide shipment of traditional PCs, including those of Apple, saw a “precipitous drop” in the first quarter of this year due to poor demand and excess inventory, a new report reveals.
The first quarter of 2023 saw the shipment of traditional PCs drop by 29 percent, to 56.9 million units, compared to the same period last year, according to a report on April 9 by market intelligence provider International Data Corporation (IDC).
Traditional PCs refer to desktops, notebooks, and workstations. Apple led the downfall, with shipments declining by 40.5 percent. It shipped 4.1 million units during the period.
Lenovo, which shipped 12.7 million units, saw shipments fall by 30.3 percent, HP shipments decreased by 24.2 percent, and Dell Technologies by 31 percent.
IDC attributed the fall in traditional PC shipments on weak demand, worsening macroeconomic climate, and excess inventory. The results indicate a “temporary return” to pre-COVID patterns, it said.
First-quarter 2023 shipment of 56.9 million units was lower than the 59.2 million units shipped out in first quarter 2019 and 60.6 million units in first quarter 2018.
“Though channel inventory has depleted in the last few months, it’s still well above the healthy four- to six-week range,” said Jitesh Ubrani, research manager for IDC’s mobility and consumer device trackers.
“Even with heavy discounting, channels, and PC makers can expect elevated inventory to persist into the middle of the year and potentially into the third quarter.”
The pause in shipment growth now gives supply chains the room to make necessary changes as several factories begin to look into shifting production out of China, the IDC report said. For instance, Apple is reportedly moving production of Macbooks from China to Vietnam, which is slated to kick off early next month.
IDC pointed out that PC makers have started “rejigging” their plans for the rest of 2023 and are pulling in orders for Chromebooks due to a potential increase in licensing costs. It expects PC shipments to “likely suffer” in the near term, only getting back to growth trends by the end of 2023 provided the global economy improves.
“By 2024, an aging installed base will start coming up for refresh,” said Linn Huang, research vice president, devices and displays, at IDC.
“If the economy is trending upwards by then, we expect significant market upside as consumers look to refresh, schools seek to replace worn down Chromebooks, and businesses move to Windows 11. If recession in key markets drags on into next year, recovery could be a slog.”
For the first quarter of fiscal 2023, which ended on Dec. 31, Apple reported a revenue decline of 5 percent compared to the same period in the previous fiscal quarter. This was the company’s steepest decline in revenue since 2016.
“We set an all-time revenue record of $20.8 billion in our Services business, and in spite of a difficult macroeconomic environment and significant supply constraints, we grew total company revenue on a constant currency basis,” Apple CFO Luca Maestri said at the time.
Mac sales, which make up 7 percent of Apple’s top line, declined by 29 percent. Sales of iPhone fell by 8 percent year over year in the first quarter. The category of wearables, home, and accessories saw sales dip by 8 percent.
Apple, however, did not provide any guidance for the second quarter—a practice it has been following for the last three years since the onset of COVID-19 pandemic. As such, the lack of clarity adds to concerns about the company.
The IDC estimate that Apple’s PC shipments fell by 40.5 percent in the first three months of 2023 could signal further potential negative financial effects for the company.
Apple’s share price is up by around 28 percent as of April 10, year to date. However, it is down by roughly 3 percent over the past year.