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PC shipments in Europe, the Middle East and Africa (EMEA) reached 17,2-million units in the second quarter of 2015, posting a 21,6% decline year-on-year, according to International Data Corporation (IDC). As expected, the market continued to suffer from unfavourable exchange rates which led to higher price points and weaker demand, with the decline deepened by the adverse year-on-year comparison with a very strong first half of 2014, when Windows XP-related renewals boosted shipments across the region.

In addition, high inventories translated into lower shipments in this transition quarter, as the industry focuses on stock depletion in preparation for the Windows 10 launch later this month.

“The second quarter was, as expected, a transition period between the very popular Microsoft Bing promotion, which supported sales over the past four quarters, and the forthcoming launch of Windows 10 at the end of July,” said Chrystelle Labesque, associate director at IDC EMEA Personal Computing.

All three EMEA regions suffered a strong contraction in PC shipments, with Western Europe posting a 19,3% decline, while CEE and MEA both dropped year-on-year, at -24,3% and -25,7% respectively.

Currency fluctuations and inventories contributed to these weak results in all three geographies. Both consumer and commercial segments recorded strong double-digit declines. Commercial shipments declined 18.9% due to an unfavourable year-on-year comparison with 2014, when many businesses transitioned away from Windows XP and renewed their older devices. Consumer shipments on the other hand contracted 24%, following the accumulation of Bing inventories across multiple geographies.

The results in both segments were weaker than anticipated, as demand did not meet expectations and many vendors were forced to reduce new shipments to clear inventories and be ready for the launch of new products in time for the back-to-school season. To benefit from the latest available operating system, some of the back-to-school business has been delayed to later this summer.

While portable PCs declined 18,5% across EMEA, desktop PCs posted much weaker results, contracting 26,4%. This product category is still relevant in the commercial segment, although it is subject to enterprise renewal cycles, while the decline continues in the consumer market, as end users move to mobile devices such as notebooks, tablets, and smartphones.

PC shipments in Western Europe totalled 10,7-million units, with the consumer segment showing the strongest contraction, at -20,8%. The market was affected by high stock levels, in particular for Windows Bing notebooks, as well as an unfavourable euro/dollar exchange rate which led to an increase in prices and contributed to a slowdown in demand. Commercial shipments contracted 17,9%, with an adverse year-on-year comparison weighing on the result.

Southern European countries again performed better than the overall Western European market, with Spain and Portugal posting 4% and 2% growth respectively. Italy contracted by 6%, a much softer decline than the Western European average.

Ongoing Windows XP renewals in the commercial space and the continued economic rebound in these countries contributed to the more positive results. On the other hand, central and northern European countries all posted declines, affected by high inventory levels, weakening demand, and adverse year-on-year comparisons. Germany and the Netherlands were the most affected, with PC shipments contracting by as much as 34% and 37% respectively.

“The decline in the consumer market in Western Europe came in line with our expectations,” says Maciek Gornicki, research manager at IDC EMEA Personal Computing. “Strong Bing shipments in the past several quarters led to high inventory levels and we anticipated that the industry would focus on stock depletion this quarter in preparation for the launch of Windows 10 and introduction of new products for the back-to-school season. The commercial market results, however, came in lower than expected. It seems that the increase in price points due to adverse currency fluctuations has taken its toll on demand and forced businesses to postpone some renewals. Many companies are also waiting for the new products to be launched with the new CPU platform later this year.”

“The PC market in the overall CEMA region in 2Q15 performed lower than forecast with the Middle East and Africa posting the worst results in years,” says Stefania Lorenz, associate vice-president of IDC CEMA. “The MEA region reported an overall decline of 25.7%. The major inhibitors were the high inventories across the region, the ongoing political and economic instability, and the currency fluctuations. Turkey, the largest PC market in the region, performed the worst, due to high inventory and the lack of government deals.”

“The PC market in Central Eastern Europe came in as forecast at -24,3%,” says Nikolina Jurisic, product manager at IDC CEMA. “The desktop PC market exhibited a stronger decrease than portables as the XP renewal wave is mostly over and comparisons to 2014 growth rates were unfavourable. The high inventory of portable PCs in most countries at the end of 1Q15 due to the end of the 15in. Microsoft Bing notebook promotion caused a major slowdown in sell-in during the second quarter with vendors and channels focusing on inventory depletion during 2Q.

“The dynamics on a country level were very different. Czech Republic and Poland both reported better results thanks to some deals in the government sector and relatively good consumer demand. The eastern part of the region continues to be negatively affected by devaluation of the local currencies in addition to the economic slowdown.”

“The industry is now focusing on the successful launch of Windows 10 in the coming weeks,” says Labesque. “However, the impact on hardware might be limited in the short term as the free upgrade approach for consumers does not require new hardware in many instances. For enterprises, most companies always conduct tests of the new operating system for several months before upgrading their platform and there, too, it might not require a hardware refresh. Overall, however, a large number of businesses are considering upgrading to Windows 10, supporting the next refresh cycle in the mid-term, particularly on mobile devices.”

The market consolidation trend has been confirmed with the top three players consolidating their positions. However, those vendors that pushed fewer Bing shipments in past quarters have benefited this quarter from year-on-year comparisons.

HP performed better than the overall market, but contracted in both consumer and commercial segments. Strong results a year ago led to an adverse year-on-year comparison, while significant sell-in of Bing notebooks in past quarters also contributed to lower shipments in 2Q as HP prepares new products for the back-to-school season and Windows 10 launch. HP results in CEE were strong with shipments growing annually.

Lenovo continued to outperform the competition and to gain shares annually. It maintained second position in the market although the vendor posted a decline in shipments. High inventory in the channels and weaker demand affected its results.

Dell posted a strong quarter and was third in the EMEA ranking. Results in commercial PC shipments were better than the market average and Dell increased its share in commercial portable PC shipments in EMEA.
Asus climbed to fourth place in the ranking but its shipments declined in line with the market. The limited Bing shipments reduced the vendor’s exposure this quarter.

Acer came in fifth with shipments declining across all EMEA sub-regions due to weak demand. The vendor also focused on clearing inventory ahead of the new shipments for the back-to-school season.

Outside the top five vendors, Apple had a very strong quarter with growth reaching double-digit levels and market shares growing significantly as the vendor benefited from shipments of its new product portfolio. Toshiba continued to focus on profitable growth, limiting shipments in some countries, which led to significant contraction, while Fujitsu posted a strong decline due to an adverse year-on-year comparison with 2Q14 when the end of Windows XP related renewals boosted the vendor’s shipments. MSI came in ninth and Wortmann 10th.