Apple reaps the benefits of a PC rebound
3min read The Traditional PC market delivered its second quarter of growth following seven consecutive quarters of decline. According to preliminary results from the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker, worldwide shipments reached 64.9 million units in the second quarter of 2024 (2Q24), representing year-over-year growth of 3.0%. While the overall market benefited from favorable comparisons to 2023, weak results in China continued to hold the market back. Excluding China, worldwide shipments grew more than 5% year over year. This positive growth trend signals a potential rebound in the PC market, which had faced significant challenges over the previous two years.
"Make no mistake, the PC market just like other technology markets faces challenges in the near term due to maturity and headwinds," said Ryan Reith, group vice president with IDC's Worldwide Device Trackers. "However, two consecutive quarters of growth, combined with plenty of market hype around AI PCs and a less sexy but arguably more important commercial refresh cycle, seems to be what the PC market needed. The buzz is clearly around AI, but a lot is happening with non-AI PC purchasing to make this mature market show signs of positivity." This commentary highlights the dual forces at play in the market: the emerging excitement around AI integration and the steady demand for traditional PC upgrades in the commercial sector.
In recent months, most of the industry players have laid out their initial strategies for AI PCs focusing primarily on the component side and the potential of the commercial market. While IDC believes the commercial market has the biggest short-term upside for AI in the PC industry, the consumer story has yet to be told in full. All eyes are on Apple to drive that message later this year with anticipated product launches, but it shouldn't be overlooked that Qualcomm, Intel, and AMD are all likely to make noise around both consumer and commercial AI PCs. This anticipation for AI-driven products underscores the evolving landscape of the PC market, where innovation is set to play a crucial role.
"Outside the commercial refresh cycle, promotional activity from consumer-oriented brands and channels have helped bolster the segment," said Jitesh Ubrani, research manager with IDC's Worldwide Mobile Device Trackers. "The market has also moved past the rock-bottom pricing brought about by excess inventory last year, signifying growth in average selling prices due to richer configurations and reduced discounting." This shift towards higher average selling prices indicates a healthier market dynamic where demand is stabilizing, and consumers are willing to invest in more premium configurations.
The latest report from IDC for the second quarter of 2024 highlights significant trends in the PC market. Lenovo led the market with 14.7 million shipments, capturing a 22.7% market share, slightly increasing from 22.5% in the same quarter of 2023. HP Inc. followed closely with 13.7 million shipments and a 21.1% market share, up from 21.3% in 2Q23. Dell Technologies saw a slight decline, shipping 10.1 million units and securing a 15.5% market share, compared to 10.3 million shipments and 16.4% market share in 2Q23. These figures demonstrate the varied performance among the top players, with some maintaining their positions while others experience slight declines.
The '2Q24/2Q23 Growth' column reveals notable growth rates among the top companies. Apple experienced the most significant growth, with a 20.8% increase in shipments, rising from 4.7 million in 2Q23 to 5.7 million in 2Q24, and its market share increased from 7.5% to 8.8%. Acer Group also saw substantial growth, with a 13.7% increase in shipments, from 3.9 million in 2Q23 to 4.4 million in 2Q24, boosting its market share from 6.2% to 6.8%. On the other hand, Dell Technologies experienced a 2.4% decline in shipments, and its market share decreased accordingly. Overall, the total PC shipments for 2Q24 amounted to 64.9 million units, reflecting a 3.0% growth from 63.1 million units in 2Q23. This growth indicates a generally positive trend in the PC market, driven by significant gains from companies like Apple and Acer Group, despite slight declines from others such as Dell Technologies. The 'Others' category, representing smaller companies, experienced a slight decline in both shipments and market share, indicating a potential consolidation in the market among the leading players.
Analysts remain upbeat about Apple, as reflected in recent price target adjustments and commentary. Needham has raised its price target on AAPL from $220 to $260, citing the company's significant $110 billion share repurchase authorization, which contrasts with other big tech companies investing $50-$100 billion in GenAI infrastructure. Despite concerns about Apple's single-digit revenue growth rate over a three-year time frame, Needham suggests that Apple could mitigate this risk by building an advertising business, similar to Amazon's strategy. Additionally, Wedbush highlights signs of iPhone stabilization in China, setting a 12-month price target of $275 per share, which would elevate Apple's market cap to over $4 trillion. They maintain a buy rating on Apple shares.
Piper Sandler has also revised its price target on Apple, raising it to $225 per share from $190 while maintaining a neutral rating. The analysts see the integration of artificial intelligence features in iPhones as a significant catalyst for upgrades. This focus on AI is seen as a critical factor that could drive consumer interest and enhance the appeal of new iPhone models, contributing to sustained growth. Overall, the positive sentiment from these analysts underscores confidence in Apple's strategic moves and its ability to leverage new technologies to maintain market leadership.