Windows Refresh and Mobility Adoption Will Promote PC Renewals in 4Q18

Shipments of Western European personal computing devices, including traditional PCs and tablets, will total 76.3 million in 2018, a 3.3% YoY decline, according to IDC.

Demand in the commercial market will remain healthy, particularly in the midmarket which will continue to ramp up. With the increase in commercial refresh rate, desktops recorded another quarter of growth. As a result, the outlook for this product category remains fairly consistent with previous expectations and is anticipated to post just a slight YoY decline in 2018Q4.

There is a growing preference toward smaller form factor desktops to save space on desks. This trend is industrywide and, combined, small and ultrasmall form factors are expected to make up just below 70% of the total commercial desktop market by the end of 2019.

Windows 10 refresh and mobility adoption will be the key drivers behind the ramp up in the midmarket, meaning ultramobile, thin, and light solutions such as ultraslims and convertibles will continue to be the strongest performing form factors as the mobile workforce expands.

Overall growth is expected to be slightly dampened by the CPU component shortage in the coming two quarters, as supply constraints will inhibit to some extent the volumes required to address the demand. This will create a backlog that is ultimately expected to be fulfilled toward the second half of 2019.

Security concerns will be of pivotal importance within the commercial space, as companies require systems that can be trusted to protect user information and other business-critical data. As a result, newer models with more up to date security measures will continue to be in high demand and will be first choice for many organizations during their renewal cycles.

The consumer outlook remains negative, primarily brought down by traditional form factor devices which struggle to inspire renewals in the mature PC market. Declining demand for stationary devices in an increasingly mobile-oriented consumer world continues to prove to be a vital challenge for desktops.

Nevertheless, gaming demand will remain strong in the coming quarters, and the increased processing power that desktops can offer within smaller form factors outside gaming will ensure that they remain relevant in this space. Furthermore, the CPU component shortage is likely to impact the supply of lower-end consumer devices as higher-end processors are prioritized.

For detachables, the pace of adoption will remain more constrained than initially projected, driven down particularly in the consumer space as alternate ultramobile solutions such as convertibles continue to gain more traction. On the commercial side, the late release of the new iPad detachable will impact its Q4 sales, but it is anticipated to generate strong device renewals within the existing iOS install base throughout 2019.