PC Shipments Drop: Impact on Microsoft’s Fiscal 4Q16 Results?



Global PC shipments fell by ~5% in 2Q16

Microsoft (MSFT), a leading company in the enterprise software space, generates the majority of its revenue from the PC (personal computing) market. As a result, any major changes in the PC market or in PC shipments have a significant impact on the company. Over the past couple of years, the PC market has been on a continuous decline.

Gartner’s recent estimates show that globally, PC shipments fell by 5.2% to 64.3 million units in 2Q16. IDC estimates show global PC shipments fell by 4.5% to 62.4 million units. However, 2Q16 marked the first time in the past five quarters when PC shipments increased in North America.

In 1Q16, global PC shipments fell by ~10%. Since 2007, 1Q16 marked the first time when PC shipments fell below 65 million units, which means this latest fall in PC shipments led shipments to drop to their lowest level in almost a decade.

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Strong dollar impacted PC shipments in 2Q16

Currency fluctuations, especially the rise of the US dollar (UUP) in comparison to other major currencies, impacted the PC market in 2Q16. The strong dollar raised PC prices in the EMEA (Europe, the Middle East, and Africa) region and in Latin America (EWZ), consequently impacting PC shipments.

According to Gartner, among the top five vendors—namely, Lenovo (LNVGY), HP (HPQ), Dell, ASUS, and Apple (AAPL)—Lenovo and Apple were the only players that experienced a fall in PC shipments. Also, all the top five vendors except Apple saw an increase in their market share. Apple’s market share of 7.1% in 2Q16 remained unchanged.

It remains to be seen how the Brexit vote will impact the PC market in 3Q16.


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