Though the PC industry (like so many others) has its share of uncertainty surrounding it right now, conditions are currently better than what Q1 shipment estimates might lead investors to think.
On Monday afternoon, research firm IDC estimated PC shipments fell 9.8% annually in Q1 to 53.2 million, a dramatic reversal from the 4.8% growth it thinks happened in Q4 2019.
Peer Gartner estimates shipments fell 12.3% in Q1 to 51.6 million, after having grown 2.3% in Q4. Gartner's use of a different definition of PC shipments than IDC probably accounts for some of the differences in the firms' numbers: Gartner counts sales of 2-in-1 devices such as Microsoft's (MSFT) Surface Pro, but not Chromebook sales, while IDC does the opposite.
Either way, both IDC and Gartner think China's COVID-19 outbreak weighed heavily on Q1 shipments, thanks to its impact on both PC production and local demand. They also both note that the arrival of COVID-19 lockdowns in other parts of the world in March led to logistics challenges.
But on the flip side, IDC and Gartner both note that demand got a boost in Q1 as PCs were bought to support remote work and learning activities (IDC adds that gaming PC demand also rose). Those comments fit with remarks from the likes of Micron (MU) , Nvidia (NVDA) and Intel (INTC) about how purchases made to support remote work/learning needs have boosted their PC-related chip sales, as well as signs of strong notebook demand at major retailers.
It's worth keeping in mind here that OEM shipments (what IDC and Gartner are estimating) aren't the same as end-user sales. Q1 may have been a quarter in which OEM shipments were badly hit by supply chain disruptions, but end-user sales held up relatively well, as retailers and other channel partners leaned on inventories to help meet demand. And though logistics is currently a problem, Chinese manufacturing activity has rebounded since February.
This by itself doesn't mean that PC shipments will be strong in Q2 and subsequent quarters. It's hard to imagine that many desktops are being bought for office environments right now -- particularly given that a corporate PC upgrade cycle tied to Microsoft's ending of Windows 7 support recently ended, and that CIO surveys suggest PC spending is likely to be hit hard during a macro downturn.
Also, while COVID-19 lockdowns are boosting consumer notebook demand for now, demand could be very different in a few months' time, if high unemployment and broader macro weakness keep pressuring discretionary consumer spending.
But with that said, the short-term outlook for PC demand -- and with it, demand for the chips, components and software that PCs rely on -- isn't as grim as IDC and Gartner's Q1 shipment estimates would suggest. Upcoming earnings reports and calls from the likes of Microsoft, Intel, AMD (AMD) , Western Digital (WDC) and Seagate (STX) should yield additional color.