© fouquin-christophe-dreamstime.com Analysis | April 30, 2013
China: 'top dog' of the PC market in 2012
China rose to the top of the PC market for the first time ever on an annual basis last year, relegating the United States to second place with a lead of more than 3 million units, according to IHS iSuppli.
PC shipments in 2012 to China amounted to 69 million units, exceeding the 66 million total reached by the United States. Only a year earlier in 2011, the United States was the leading global destination for PCs. Beyond its large size, China’s PC market exhibits distinct characteristics that set it apart from the computer trade elsewhere, possessing a vast untapped rural market and unique consumer-purchasing patterns. While desktop PC shipments lagged notebooks around the world, the two PC segments were on par in China in 2012, with an even 50-50 split, as shown in the attached table. “The equal share of shipments for desktops and notebooks in China is unusual, since consumers in most regions today tend to prefer more agile mobile PCs, rather than the bulky, stationary desktops,” said Peter Lin, senior analyst for compute platforms at IHS. “The relatively large percentage of desktop PC shipments in China is due to huge demand in the country’s rural areas, which account for a major segment of the country’s 1.34 billion citizens. These consumers tend to prefer the desktop form factor.” The market will change gradually as desktop PCs face rising competition from the high value proposition presented by notebooks. Notebooks will then surpass desktops in the country by 2014, tracking more closely with the worldwide desktop-to-notebook PC ratio of 36 to 64 percent. The desktop vs. notebook pattern of consumption in China is only one example of the distinctive hallmarks of the country’s dynamic PC market. In another indicator, China also has approximately a 50-50 proportion in consumer vs. commercial PCs, compared to the 65-35 percent ratio for the rest of the world. A third pattern unique to the China PC market is the preferred notebook display size of 14 inches, which accounts for more than 70 percent of notebook PC shipments in the country. For the rest of the world, the 14-inch makes up less than 30 percent. A fourth pattern of note is the attach rate of PCs with a pre-installed operating system, especially for notebooks. While mature PC markets in other parts of the world claim a 90 percent attach rate, the proportion for China comes out to lower than 50 percent, with the ratio even lower in the desktop PC market. Despite such exclusive behavior, the China PC space shares one common trait with the worldwide PC market. Like the rest of the world, demand in China remains weak as consumers migrate to using mobile devices like cellphones. China’s PC market is projected to grow only by 3 to 4 percent this year. Even so, a vast market opportunity continues to exist for PCs in the country, in the form of potential first-time buyers mostly residing in the countryside. The government already plans this year to invest some 40 trillion yuan—equivalent to some $6.4 trillion—to build rural infrastructure in the next 10 years, and PC original equipment manufacturers can take advantage of the initiative to build out and expand from the cities, IHS believes. China is also on track to retain its position as the largest PC market in the world for the foreseeable future unchallenged and alone—further providing PC brands a rare opportunity for expansion, counter to the myriad travails they face in the rest of the world.
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