Global PC sales are down in Q3- is the strong dollar to blame?

Global PC sales are down in Q3- is the strong dollar to blame?

In the United States, sales of personal computers is down across the board. However, the PC giants are far more concerned about sales outside the US, particularly in Europe, the Middle East, and Africa, all of which saw double-digit declines.

The global PC market continues to decline, despite hopes that the release of Windows 10 would buoy sales.

The 2015 third quarter reports from the IDC Worldwide Quarterly PC tracker show that 71 million computers were sold. Although this may sound like quite a large number, it in fact represents a decline of nearly 11 percent from last year. Experts had predicted that the worse case scenario would only be a 9.2 percent drop.

Many expected this third quarter to bring bad news. It is no secret that Windows is facing increasingly difficult financial conditions as it tries to transition away from Windows 8 and replace its inventory with models carrying the Windows 10 operating system as well as a new Intel Skylake processor.

“The PC market continues to contract as expected, but we remain optimistic about future shipments,” said Jay Chou, the research manager for IDC Worldwide PC Tracker. “While PC shipments will be hampered in the short run by the availability of a free upgrade to Windows 10, the improved PC experience across user segments should drive longer-term demand for new PC hardware that is expected to help stabilize the market in 2016 and beyond.”

The blame cannot be placed solely on Windows 10, however. Many users opted for the free OS upgrade rather than buying a new computer. Moreover, Windows decision to accelerate the official retail release proved to be a challenge for getting the models to market in the third quarter.

Additionally, a strong dollar means vendors are at a disadvantage in terms of currency exchange rates.

“The global PC market has experienced price increases of around 10 percent throughout the year, due to the sharp appreciation of the U.S. dollar against local currencies,” said Mikako Kitagawa, Gartner Principal Analyst. “In the third quarter of 2015, this continued to be a major cause for weaker demand in those regions.”

Unfortunately for Windows, its competitors are not felling a similar pinch. Lenovo, HP, Dell, and Apple all saw third quarter with better than market average performance. In total, there was only a 4.5 percent decline in sales compared with last year.

“Still, there is some hope in the fourth quarter,” said Linn Huang, IDC’s research director for devices and displays. “New designs running Windows 10 and powered by Intel’s new Skylake processors are coming to market and may represent the most compelling reason we’ve had in years for consumers to upgrade their PCs. Whether this compulsion translates into actual sales remains to be seen.”

In the United States, sales of personal computers is down across the board- only 17.3 units were sold. HP sold the most PCs in the US, followed by Dell, then Apple. However, the PC giants are far more concerned about sales outside the US, particularly in Europe, the Middle East, and Africa, all of which saw double-digit declines. Asia also saw a soft quarter.

Nonetheless, industry insiders refuse to be daunted.

“Commercial entities are still buying PCs. The free upgrades are definitely hurting hardware sales, particularly among consumers,” said Roger Kay, principal at Endpoint Technologies Associates and a former IDC analyst. “And we’ll see more consolidation over the next year or two.”

Indeed, some experts, including Kay, are expecting to see some non-US vendors forced to leave the PC market due to increased financial pressure.

“I’m sure the recovery played a role,” said Kay. “Windows 10 will drive commercial upgrade activity over the next year, but the holiday may be slow because of siphoning off of consumers by the high-mobility market — smartphones, tablets, wearables — uncertainty in financial markets, and the aforementioned free upgrades.”

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