PC market expected to slow down in 2022 after two years of double-digit growth

The news: After an unprecedented period of pandemic-led demand in the face of component shortages, the global PC market is starting to cool down.

What this means: IDC’s latest Worldwide Quarterly Personal Computing Device Tracker, which gathers data in more than 90 countries, indicates that even as demand slows in 2022, the PC market is expected to see a five-year growth rate (CAGR) of 3.3% in the long run, mostly driven by laptop sales, per The Register.

• "The market has pulled past peak pandemic PC demand," said Jitesh Ubrani, research manager with IDC's Mobility and Consumer Device Trackers. 
• Global shipments of traditional PCs are expected to hit 344.7 million units by the end of 2021. Annual shipments are expected to decline 3.4% in the year's final quarter.
• Laptops and gaming PCs are still in demand, but tablets are on a downward trend; fourth-quarter shipments for tablets are predicted to decline by 8.6% YoY.

The bigger picture: The frenzied demand for PCs at the start of the pandemic sustained double-digit growth even as manufacturers felt the sting of a protracted chip and component shortage this year.

• In context, HP’s CEO Enrique Lores said in August, “We are selling everything that we build,” noting that July sales would have grown more if components were readily available. 
• The added pressure of a global component shortage put undeniable strains on the industry that “had to satisfy historic demand for devices … that met the remote and hybrid moment,” said Vlad Rozanovich, president of Lenovo North America, in an interview with Insider Intelligence. 
• IDC noted that PC makers are also cutting corners by sacrificing features in lower-end products like Chromebooks, which, like tablets, are being shunned. 

What’s next? PC makers will continue to fine-tune their output to work around chip shortages that are expected to continue in 2022.

• PC makers will prioritize more expensive commercial products over cheaper consumer products until supply catches up with demand. 
• This means doubling down on business laptops and gaming PCs, which are in high demand and can yield more profit since they are premium segments.
• Tablets will continue to be challenged, mostly by premium smartphones and notebook PCs. In context, Apple cut iPad production in half in Q3 to focus on iPhone 13, which is in much higher demand.