The PC industry is finally on the road to recovery

The turnaround in the global PC market continues to gather speed as excitement around AI PCs grows and business customers begin purchasing laptops and desktops. According to initial data from market research company IDCThe PC market grew 3%, marking the second quarter of growth after an impressive seven consecutive quarters of declines.

While this is higher than the 1.9% growth that rival firm Gartner says the market saw in the quarter, both numbers point to a recovery in a sector that was crushed after seeing sales surge at the start of the pandemic, which suppressed sales in subsequent quarters. .

“Make no mistake, the PC market, like other technology markets, faces challenges in the near term due to maturity and headwinds,” said the IDC group vice president. Ryan Reith.

“However, two consecutive quarters of growth, combined with a lot of market excitement around AI PCs and a less attractive but possibly more important commercial upgrade cycle, appear to be what the PC market needed. happening with the purchase of AI-free PCs to make this mature market show signs of positivity.”

In the first quarter of 2023, Gartner reported that PC shipments fell by a staggering 30% year over year, before starting to rise again in the second quarter of 2023, when the company reported that PC shipments fell by 16%.

The declines were a quick turnaround from the explosive growth the PC industry saw in the early days of the pandemic. Consumers and corporate clients stuck on their couches for months purchased new systems for working from home and entertainment. But with so many people buying PCs at once, there were fewer customers needing new machines in the following months, causing sales to plummet.

Since then, sales have continued to improve as consumers begin to replace the laptops and desktops they purchased in the early months of 2020.

The PC market decline has hit everything from software vendors like Microsoft (MSFT), which reported OEM sales of Windows, or sales of its Windows operating system to laptop and desktop makers, fell 39% in the second quarter of fiscal 2023. from the company.

Intel (INTC) and AMD (AMD) saw similar declines, with Intel reporting that first-quarter revenue from the Client Computing Group, the organization responsible for PC chip sales, was down a whopping 38% compared to the first quarter of 2022. AMD reported annual growth of 65%. annual decline in net revenue across its customer group in 2023, from $2.1 billion to $739 million.

The market turnaround comes as the PC industry considers AI PC as the next stage of growth for laptop and desktop makers. AI PCs are roughly defined as PCs equipped with specialized neural processing units.

The story continues

Microsoft is marketing AI PCs that include its Copilot technology as Copilot+PCs. It’s a bit complicated and the company’s launch didn’t exactly go as expected. Initially, Microsoft hoped to launch its Copilot+ PC boost with a software feature called Recall, designed to capture screenshots of virtually everything you do on your computer, making it easier to pick up where you left off and preventing you from getting lost while searching for the network. But security researchers raised concerns about the app, and Microsoft was forced to pull the feature to address any potential issues.

Intel, AMD, and Nvidia are also participating in the AI ​​PC push, with Intel and AMD launching AI PC chips, and Nvidia noting that PCs running its dedicated graphics chips can easily handle AI PC applications.

Qualcomm (QCOM) is also entering the AI ​​PC market, launching its latest PC chip in Microsoft Copilot+ PCs, including the company’s Surface Laptop and Surface Pro. The chipmaker promises the kind of performance that Apple has managed to squeeze out of its MacBook Pro and MacBook Air laptops, including all-day battery life and exceptional processing power.

The AI ​​PC market is still new — Microsoft only launched its Copilot+ PCs in May — and it’s still unclear how many users will specifically opt for AI PCs for their capabilities versus how many will do so because they’re simply the latest and biggest on the market. Still, the industry is clearly on an upward trajectory, and for PC makers, that’s what matters most.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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