Citing final data from research firm IDC last week showing a 1.6% decline in PC shipment units last quarter, well below the 2.1% he’d been expecting, and worse than the preliminary report last month from IDC showing a mere 0.1% decline, Shope cut his 2012 PC unit growth estimate to 0.7% growth from a prior 4% estimate. He’s also cut his 2013 view to 4% from 5.2%.
“PC demand continues to deteriorate,” writes Shope, adding “We believe that continued macro weakness and tablet cannibalization will weigh on units and pricing further in 2012 and 2013.” Shope doesn’t believe Microsoft‘s (MSFT) Windows 8 release this October will “stimulate robust growth,” nor does he think the “ultrabook” laptops being promoted heavily by Intel (INTC) are a savior: “We continue to believe that Windows updates have had a relatively muted impact on PC demand in the past, as coincidental changes in PC unit trends have been more directly driven by macroeconomic fluctuations. As for Ultrabooks, we continue to believe that Ultrabooks will be substitutive, rather than incremental to the PC market. In particular, we believe that Ultrabooks will need to reach much lower ASPs to find broad adoption.”
Shope sees trouble for both Dell (DELL) and Hewlett-Packard (HPQ), with both under pressure as prices decline, but Dell especially at risk because of a slowing in commercial desktop shipments: “Looking at individual vendors, the top three PC vendors by units all experienced greater- than-average ASP declines. HP saw ASP declines of 6.4% in 2Q2012; Lenovo saw ASP declines of 6.5%; and Dell saw ASP declines of 5.7% in the quarter […] Most important for Dell, corporate unit growth deteriorated substantially in the second quarter, as large corporate PC units declined 0.2% annually for the June quarter versus 18.5% growth in the March quarter.”
At the same time as all that, Shope has raised his 2012 and 2013 estimates for tablet computer shipments, where he expects Apple (AAPL) to maintain the pole position: “We are refreshing our tablet forecast to update it for our recent iPad forecast following Apple’s earnings report and to account for IDC’s 1Q2012 tablet data. We now forecast tablet units of 109.9 million in 2012 and 148.4 million in 2013, from 103.4 million and 139.2 million previously. We expect that Apple will account for 66.1% and 67.4% of units in 2012 and 2013, from 67.5% and 67.1% prior.”
Shope’s estimate does not include any shipments of an “iPad Mini” from Apple, which he believes could add to Apple’s outlook.
We at Nordic Investor think that tablets and smartphones will continue their amazing growth story, particularly in emerging markets where penetration rates are still low. In tandem with device growth, we believe that the app market is set for continued explosive growth for the years to come. We at Nordic Investor are long app developers such as Glu Mobile and G5 Entertainment.