The turnaround in the global PC market continues to gather momentum as hype around artificial intelligence computers grows and corporate customers start buying laptops and desktops. According to early data from market research firm IDC, the PC market grew 3%, marking the second quarter of growth after a staggering seven consecutive quarters of decline.
While that’s higher than the 1.9% growth rival firm Gartner says the market saw in the quarter, both numbers point to a recovery in a sector that was crushed after its sales pulled ahead at the start of the pandemic , which depressed sales in subsequent quarters.
“Make no mistake, the PC market, like other technology markets, faces near-term challenges due to maturity and headwinds,” said IDC Group Vice President Ryan Reith.
“However, two consecutive quarters of growth combined with a lot of market buzz around AI PCs and a less sexy but perhaps more important commercial refresh cycle seems to be what the PC market needs.” The buzz is obviously around AI, but there’s a lot going on in non-AI PC buying 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 rebound in the second quarter of 2023, when the firm reported a drop in PC shipments with 16%.
The declines were a quick turnaround from the explosive growth the computer industry saw in the early days of the pandemic. Consumers and corporate customers, stuck on the couch for months, bought new systems to work from home and for fun. But with so many people buying PCs at once, there were fewer customers needing new machines in the months that followed, leading to a drop in sales.
Since then, sales have continued to improve as consumers began to replace the laptops and desktops they bought in the early months of 2020.
The declines in the PC market hit everything from software vendors like Microsoft ( MSFT ), which reported Windows OEM sales, or sales of its Windows operating system, to laptop and desktop makers fell 39% in the fiscal second quarter of 2023
Intel ( INTC ) and AMD ( AMD ) saw similar declines, with Intel reporting that first-quarter revenue for its Client Computing Group, the organization responsible for computer chip sales, fell a whopping 38% compared to Q1 2022. AMD reported a 65% year-over-year decline in net revenue in its customer group in 2023 from $2.1 billion to $739 million.
The turnaround in the market comes as the PC industry looks to AI PCs as the next stage of growth for laptop and desktop makers. Artificial intelligence computers are roughly defined as personal computers that are equipped with specialized neural processing modules.
Microsoft markets AI PCs that incorporate Copilot technology as Copilot+PC. It’s a bit of a mouthful, and the company’s launch doesn’t quite go as hoped. Microsoft originally expected to kick off its Copilot+PC push with a software feature called Recall, designed to take screenshots of almost everything you do on your PC, making it easier to pick up where you left off and prevent you from losing your place while browsing the web . But security researchers raised concerns about the app, and Microsoft was forced to pull the feature to address potential issues.
Intel, AMD, and Nvidia are also joining the AI PC push, with Intel and AMD releasing AI PC chips, and Nvidia noting that PCs running dedicated graphics chips can easily run AI PC applications.
Qualcomm ( QCOM ) is also making inroads into the AI PC market, launching its latest PC chip in Microsoft’s Copilot+PC, including that company’s Surface Laptop and Surface Pro. The chipmaker promises the performance that Apple managed to wring 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 not yet clear how many consumers will specifically choose AI PCs for their capabilities versus how many simply because they’re the latest and the largest 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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