Opinion: The PC pandemic boom is still on, but two dangers loom
After more than a year of the COVID-19 pandemic, people are still buying personal computers in droves, but PC makers face rising costs to build new machines as the threat of a sudden drop in prices. demand is looming.
HP Inc., HPQ,
Dell Technologies Inc. DELL,
and Lenovo Group 992,
all reported good results this week as the PC sales pandemic continued. Lenovo, the leading China-based PC maker, saw a staggering 400% revenue growth to $ 15.6 billion in its most recent quarter, its fastest growth in nearly a decade, while that Dell’s consumer sales blew estimates away and that HP continued to do well.
“I think the main difference is people, they’re starting to realize… they need one PC per person and not one PC per house,” said Gianfranco Lanci, president and chief operating officer of Lenovo, when asked during the company’s earnings call if there had been any changes in the consumer market. “We’re pretty optimistic,” he said, from “what we’re seeing in terms of growth,” adding that market research data confirms that growth will continue for several quarters.
The market research firm IDC also sees its growth continue this year, while reporting that PC shipments have increased at an astonishing 55.2% year after year. The group also recently noted, however, that component shortages will likely be a topic of conversation for the majority of 2021, but the bigger question should be what PC demand will look like two to three years from now.
Read more: The pandemic has brought the personal computer back to life, with help from Zoom
Analysts on the three business calls have expressed concerns about how long the strong demand will last and what companies are seeing in the market. But the biggest and most immediate concern was how the industry is being hampered by chip shortages and other component supply issues.
“It’s clearly a fluid environment,” Dell CFO Tom Sweet said on a conference call Thursday afternoon.
“We are very optimistic about the opportunities over the next few years in the PC space,” Sweet added. “But there is work to be done in the short term as we work our way through the component shortage.”
Dell’s better-than-expected results include a 42% jump to $ 3.5 billion in consumer PCs and related sales, while business sales rose 14% to $ 9.8 billion. HP reported 27.3% growth to record revenue of $ 15.9 billion, and executives spoke of a strong second half, but also addressed costs that could squeeze margins.
“We are likely to see higher product and logistics costs, which will potentially impact our ability to meet demand,” said Enrique Lores, CEO of HP. “And then finally, there are seasonal headwinds in the second quarter, like in sourcing, because the second quarter is typically our strongest quarter for sourcing.”
As more companies slowly reopen their offices, investors fear the pandemic-fueled consumer buying boom will slow down, although executives have said it could also prompt companies to modernize some of their equipment. Office. The PC industry has had a rare year of strong sales growth, but investors are right to be wary of what happens when the boom ends.