AI PCs Fail to Boost Global PC Market in Q3 2024 Despite Industry Hype

PC shipments stuck in neutral despite AI buzz

The PC market is not showing many signs of a rebound, despite the hype around AI PCs, with market watchers split over whether unit shipments are up or down slightly. Those magical AI PC boxes were supposed to fire up buyer enthusiasm and spur the somewhat listless market for desktop and laptop systems into significant growth territory, but that doesn't appear to be happening. According to the latest figures from Gartner, global PC shipments totaled 62.9 million units during Q3 of this year, representing a 1.3 percent decline compared with the same period last year. However, this does follow three consecutive quarters of modest growth. "Even with a full line-up of Windows-based AI PCs for both Arm and x86 in the third quarter of 2024, AI PCs did not boost the demand for PCs since buyers have yet to see their clear benefits or business value," commented Gartner Director Analyst Mikako Kitagawa. This is perhaps understandable when AI PCs are largely just a marketing concept, and vendors can't agree on exactly what the the definition of an AI PC should be. Even worse, some buyers of Arm-based Copilot+ machines discovered that their performance isn't actually very good with some applications. Nevertheless, Gartner believes that the PC market is now on a recovery track, with Kitagawa claiming: "At the worldwide level, PC demand will see more uptake toward the end of 2024 and more robust growth in 2025, when the PC refresh will be at its peak." This belief is shared by another analyst outfit, Canalys, which puts market shipments at 66.4 million units during the quarter, saying this represents a modest 1.3 percent year-on-year rise. "Although growth in Q3 was modest, the PC market recovery is now well under way with a number of positive signals indicating stronger performance in the coming quarters," opined Principal Analyst Ishan Dutt. Canalys says that this slight uptick is thanks to strong demand from businesses, which now have just a year to upgrade their fleets to Windows 11 to avoid paying extended support fees for Windows 10. "Commercial procurement is expected to remain elevated throughout the rest of this year, with 54 percent of channel partners surveyed by Canalys anticipating growth in their PC business in H2 2024 compared with the same period last year," Dutt said. The launch of the latest-generation AI PC processors from Intel, AMD, and Qualcomm is also strengthening the value proposition of upgrading an old PC, Canalys maintains, although it concedes that "consumer demand has not been as strong." It expects that the 2024 holiday season will see modest growth toward the end of this year. The two analyst firms agree on who the top players are in the PC market, both ranking Lenovo as the number one vendor in terms of shipments followed by HP then Dell. Asus and Apple are vying for fourth and fifth spot, with Gartner putting Apple ahead, while Canalys ranks Asus higher. Both indicate that Lenovo has seen its market share rising, with 2.5-3 percent growth year-on-year, while HP has remained largely static and Dell has declined by about 4 percent. According to Gartner, the US market is where the growth was in the past quarter, up 5.6 percent compared with the same period last year. In contrast, the EMEA market saw a decline of about 1.5 percent, while the Asia-Pacific market saw a decline of 8.5 percent year-on-year. The company said this was largely due to China, which saw a fall of 10 percent due to weak demand for desktop PCs from government and state-owned organizations. ®

Slow Start for AI PCs As Overall Market Stumbles in Q3

The tech industry has been talking up the AI PC as the future of computing. But the marketing hype wasn't enough to lift the PC market in Q3. Research firm IDC reports that PC shipments decreased by 2.4% year-over-year from July to September, for only 68.8 million units. That's surprising, considering many analysts expected the PC market to be on the rebound following a post-pandemic slump. Rival research firm Gartner also estimates that PC shipments fell in Q3 by 1.3% year-over-year. These initial results may raise doubts about AI PC marketing capturing consumer interest. "Even with a full lineup of Windows-based AI PCs for both Arm and x86 in the third quarter of 2024, AI PCs did not boost the demand for PCs since buyers have yet to see their clear benefits or business value," says Gartner analyst Mikako Kitagawa. Meanwhile, IDC points to rising costs and a surge in PC volumes in Q2, which led to shipments falling, especially for Apple. That said, PC shipments saw significant US growth during Q3, increasing by 5.6% year-over-year, according to Gartner. The research firm attributed the steady uptick to "continued stable macroeconomic conditions," along with healthy demand from the US public sector and back-to-school sales. Both Gartner and IDC also expect PC growth to resume globally throughout the year and into 2025, partly because Windows 10 officially loses support on Oct. 14, 2025. New AI-focused PCs, including those from Qualcomm, Intel, and AMD, along with Apple's M4-based Macs, will help drive the "premium segment" for PCs in the coming months, IDC adds. Still, the research firm expects mass market adoption of AI PCs to potentially take longer than expected and into 2026. "The next year-and-change will be largely about developing software, use cases, and target audiences for this AI-enabled hardware," says IDC analyst Linn Huang.

Overall Global PC Shipments Drop By 2.4% But AI Hardware Demand Boosts Sales

There was a slight decrease in global PC shipments in Q3 2024 compared to Q3 2023, where Apple was the most affected company. The global PC shipments are forecasted to grow significantly in the coming years but as of now, the overall shipments have declined a bit compared to the previous year. Since the transition to AI hardware, it's expected that the PC market will see a boom in the coming months and the slight decrease in shipments is only temporary. The International Data Corporation (IDC) has published the latest stats for total PC shipments worldwide in the third quarter of 2024. Compared to the 3rd quarter of 2023, global PC shipments have declined by 2.4%. The total PC shipments decreased to 68.8 million in Q32024 compared to 70.5 million in Q32023. What we can see is that PC makers like Lenovo, HP, and Dell have maintained their market share, which is the highest among all the companies. Dell Technologies share did decline by 4%, which has its market share dropped to under 10%. But Apple took the biggest decline of 24.2%, reducing its total PC shipment from 7 million to 5.3 million in 3Q2024. Meanwhile, ASUS saw the highest growth of 10% market share, delivering an increase of roughly 0.5 million shipments in 3Q2024 compared to 3Q2023. The overall shipments, although declined by a few million units, the AI hardware demand is expected to introduce a surge in both shipments and revenue. The AI PC shipments already increased by 2x from 1Q2024 to 2Q2024, and in the coming years, the Microsoft Copilot+ AI laptop shipments are forecast to grow exponentially. This is what experts predict and as per Jitesh Ubrani, who is the research manager at IDC's Worldwide Mobile Device Trackers, the AI PCs and Apple's M4-based devices are expected to boost the premium segment in the coming months. He said, Demand, without a doubt, has returned for PCs among consumers and commercial buyers, However, much of the demand was still concentrated at the entry-level thanks to a recovering economy and the back-to-school season in North America. That said, newer AI PCs such as Copilot+ PCs from Qualcomm along with Intel and AMD's equivalent chips as well as Apple's expected M4-based Macs are expected to drive the premium segment in coming months. The growth will be gradual, at least up to 2026 as per Linn Huang, the research VP of Devices and Displays. According to Linn, While we expect AI to reach ubiquity at some point at the end of this decade, the ramp up towards mass market will take longer than expected, well into 2026, Japan saw the biggest increase in PC shipments in 3Q2024 but other regions will also see such an increase in the coming quarters. At the moment, the demand is concentrated mostly in the entry-level segment but the commercial demand is also increasing since many PC makers are preparing their devices as Windows 10 is about to reach the end of its life.