There could be a drastic cut back in the number of notebooks on the market.
Word in from the Far East is that notebook ODMs, such as Quanta and Compal, have been expanding staff specifically for servers used in cloud computing data centres, their component suppliers, including thermal modules, power supplies and metal stamping, have also extended related production.
It seems likely that the manufacturers have had a gutsful of making PCs that no one wants and are seeing the future as being cloudy.
Intel’s datacentre business units had 10% growth in second-quarter revenues, while profits from the business also surpassed those of its PC business, making the datacentre centre business the CPU giant’s new main profit contributor. The trend also triggered upstream supply chains to start turning their focuses to the segment.
Choung Technology said that more than 40 per cent of its revenues contributed by server-related products. CCI ships about eight million thermal modules for servers each year, and is supplying to clients including HP, Dell, and Quanta.
Furukawa Electric also stuck its foot in the door supplying Google and Microsoft to supply products for their datacentres. The company also started sending samples to Facebook and Amazon recently, looking to expand into their supply chains.
Quanta’s server team has about 1,000 employees and is focusing mainly on the integration between software and hardware. By the end of 2015, Quanta is looking to double the team’s personnel and will continue to recruit more talent in 2016.
Manufacturers of notebooks and tablets are looking to new markets to bolster their businesses because Europe can no longer be relied upon for healthy sales.
Last week we reported PC demand, particularly in Eastern Europe, was well done.
Now, Taiwanese wire Digitimes said that the manufacturers are looking to other market such as South East Asia and and Central and South America to make up the shortfall.
It’s not just lack of demand that is the problem because the margins the mostly Taiwanese companies are also taing a hit because of the parlous state of the Euro.
The notebook manufacturers can’t see light at the end of the tunnel in Europe until at least the end of the second quarter, the report adds.
The research wing of Digitimes believes that 221.4 million tablets will be shipped this year, and that’s a fal of 11.9 percent compared to 2014.
The outlook for PCs looks pretty grim in 2015, according to data released by Gartner.
The market research outfit said that PCs and ultra mobiles will deliver revenues of $226 billion this year, but that will be a 7.2 percent decline.
You have to take the current strength of the US dollar into account, Gartner warned, but even after that, the global market will show a 3.1 percent drop during the year.
Gartner forecasts that so called traditional PCs – that includes desktops and notebooks – will fall from 252,881,000 units this year, to 236,341,000 units in 2017.
The firm said that PC vendors are raising their prices to stay profitable but this is having a Catch 22 effect because it’s forcing customers to keep their purses tightly closed. Home users are also not expected to lash out on new devices.
Mobile phones will grow by 3.5 percent during this year and Gartner believes that rather than buy PCs, people will buy smartphones instead. Tablet sales will suffer because of that.
Roberta Cozza, a research director at Gartner, said: “Following rapid growth, the current mature consumer installed base for tablets is comparable to that of notebooks. Not only is the tablet segment nearing saturation in mature markets, but the influx of hybrids and fabulist will compete directly with tablets in emerging markets.”
She seems to think that despite Apple’s high prices, many users of high end Android devices will move to iOS.
A report said there were large falls in shipments of notebooks in January and February.
Digitise Research said that shipments for the five multinational brands and the top three manufacturers – original design manufacturers – fell by 13 percent and 18 percent in February.
One major reason, the analysts say is because there are high levels of stocks of models intended for home use left over from last year. Fluctuations in exchange rates also caused a decline in sale.
However, it appears that Hewlett Packard managed to buck the trend and in February its notebook shipments rose by 30 percent. It had managed to make adjustments to its overstock and also made significant sales of units for the educational market to India.
Lenovo fell behind HP in the top five, but it was Acer and Asustek which really took a hit, with falls in shipments of as much as 40 percent, Digitimes Research said.
The ODMs, who make notebooks to be rebranded by others, also saw their shipments fall during the period.
Major and minor vendors
saw precipitous falls in shipments of notebooks in January.
That’s according to Digitimes Research, which said HP saw its shipments fall by 45 percent and Lenovo fall by 30 percent compared to the previous month.
It wasn’t just the big names that suffered – the original design manufacturers – including giant Compal – saw its shipments fall too.
However, Compal supplies machines to both HP and Lenovo, the market research firm said.
Microsoft has been forced by incursions from Chromebooks to slash its licensing rate – but these machines are not immune to a more general decline in notebooks.
The news may be bad for HP and Lenovo but could be good news for people looking for notebook bargains – most of the machines sitting in warehouses are aimed at home use.
It’s still not entirely clear how Microsoft will approach the thorny matter of Windows 10 when that’s launched in the third or fourth quarter of this year. It also hasn’t disclosed how many different varieties of Windows 10 it will offer at launch.
There is some sentiment that people are holding off buying notebooks until they have a clearer picture of what is going to emerge from Redmond.
Things went better for
the notebook industry last year, according to a report from Taiwanese research house Trendforce.
That was largely due to people replacing Windows XP systems and the market itself promoting low priced notebooks.
The survey said shipments of notebooks in 2014 hit 175.5 million, a year n year growth of 3.6 percent.
The leader in the X86 pack was HP, followed by Lenovo, Dell, Asus and Acer.
But the real stellar performer in 2014 was Apple, because it lowered some prices. It showed year on year growth of 46.4 percent, and increased its market share to 9.3 percent.
Here, according to Trendforce, are the top runners and riders in the notebook race.
Taiwanese suppliers of notebooks
are not over impressed by the news last week that Microsoft will give free upgrades to its Windows 10 operating system.
Digitimes, which regularly talks to manufacturers in the supply chain, reports that Microsoft’s move is unlikely to prompt people to replace their existing notebooks.
Windows 10 is not expected to be available until the third quarter of this year – and the supply chain doesn’t think a free upgrade from Windows 8.1 or Windows 7 is much of an incentive for people to go out and buy new machines.
The report claims that many people continue to use Windows 7 and as much as 10 percent of people are still using the now unsupported Windows XP.
People prefer to buy new smartphones or tablets than expensive notebook PCs, Digitimes said.
Notebook sales will continue to be of low end models rather than the full monte with bells and whistles, Digitimes said
Sales of notebooks
during the fourth quarter of 2014 amounted to 46 million units.
That’s according to Digitimes Research, which said in a report that shipments were flat compared to the same quarter in 2013.
Of the notebooks shipped, Taiwanese original design manufacturers (ODMs) shipped 36.6 million, representing nearly 80 percent of the total marketplace.
ODMs make notebooks which are then rebranded by multinationals or sold as so called “white boxes”.
The chief ODMs were Quanta with 33 percent, Compal with 31.4 percent, Wistron with 15.8 percent, Inventec with 7.5 percent and Pegatron with 6.9 percent.
Digitimes Research said HP was the number one vendor in the quarter with 23 percent market share, Lenovo second, Dell third, Asustek fourth, Acer fifth, Apple sixth, Toshiba seventh, Samsung eighth and Fujitsu ninth.
People are being tempted to upgrade their PCs after years of delayed renewals.
IDC said that PC shipments in Western Europe were up by 23.6 percent in the third quarter, compared with the same quarter last year.
Although sales slowed in the enterprise arena, people are being tempted by low end notebooks using Windows 8.1 Bing. The commercial sector has already largely completed its shift from Windows XP, IDC said.
The tablet market declined in the third quarter but 2-in-1 machines did well, growing 46.4 percent in the quarter. Smartphones showed 6.1 percent growth – largely caused by affordable smartphones and the arrival of 4G networks.
IDC calls notebooks, desktop PCs, smartphones and tablets “smart connected devices” and the leader of the pack is Samsung – even though its growth fell by 16.5 percent compared to the third quarter of 2013. Samsung was followed by Apple, Sony, HP, and Lenovo.
Lenovo showed a 64.1 percent unit growth quarter on quarter, year on year.
Strong orders from both the enterprise and from the retail market meant growth in notebook sales during the month of November, largely due to HP’s position in the market.
That’s according to data from Digitimes Research which claims the top five multinational vendor and Taiwanese original design manufacturers (ODMs) showed shipments growing by 10 percent in the month, following a decline in shipments in October.
All the vendors are attempting to stem the growth of tablets and smartphones and the research outfit claimed HP ordered four million notebooks from its ODM partners in the month – with Quanta, Compal, and Investec benefiting from the push by the US giant.
The researchers claim that shipments of global tablets will be in stasis for 2014, when all the figures are added up. And it also predicts sales will decline in 2015.
Digitimes Research estimates that combined shipments of notebooks and tablets will be over 350 million units in 2015 but the major vendors incuding Apple, Lenovo, Samsung, HP, Asustek, Dell and Acer will take steps to secure their positions in the marketplace.
Shipments of notebooks are only set to grow 0.6 percent in 2015, amounting to 174.6 million units, while sales of tablets will fall by 3.5 percent to 185.6 million units.
That’s according to Taiwanese market intelligence firm Trendforce, which said that this year notebook vendors struggled to gain market share this year by essentially engaging in a price war.
But Caroline Chen, a notebook analyst at the company, said that next year we’ll see an array of different products with tablets and low priced notebooks facing stiff competition from smartphones and so called phablets.
She thinks notebook vendors need to rethink their strategies.
Tablets didn’t do well this year and overall 366 million mobile PCs – a category that she defines as including notebook computers and tablets – shipped. That’s largely similar to sales last year.
Subsidies from major players like Microsoft, Google and Intel have skewed the market. Chromebooks, she thinks, will account for eight million units in 2015.
She said that because subsidies from Intel and Microsoft lower manufacturers’ costs, the subsidies benefit end users. “It would be better if Microsoft and Intel can find more substantial ways to develop the market,” she said.
A survey has suggested that tablet sales are declining in the face of increased notebook sales.
DisplaySearch, bought by HIS recently, said in the third quarter of this year, notebooks rose by 10 percent compared to 2013 to account for 49.4 million units shipped. The figures contradict other estimates which suggest that sales are weak or flattish.
But tablet PCs, in the same quarter, fell by eight percent.
DisplaySearch said the slump in demand for tablet PCs helped the growth of notebook sales.
In particular, growth of notebooks was helped by low priced Windows based notebooks PCs and by Chromebooks.
The leaders worldwide for notebooks are Lenovo (20%), HP (19%), Dell (12%), Acer (10%) and Apple (9%).
These five companies between them hold 69 percent of total notebooks shipped worldwide. Apple sales of the iPad declined in the third quarter by 13 percent.
Compal, which claims to be the second largest contract maker of notebooks worldwide, said it anticipated slower sales of the devices this quarter.
The fourth quarter was traditionally the most bouyant time of the year to sell PCs.
But company president Ray Chen said that falling sales of notebooks will be offset by shipments of smartphones and tablets.
Chen said, according to the Taipei Times, that non PC business will contribute 30 percent of shipments this quarter. Last quarter that figure was 21 percent.
Compal makes tablets for Apple and Amazon, and Chen said smart devices will be the major driving force for revenues next year. Notebook shipments will flatline.
Margins are already slim for companies like Compal and Wistron who make devices that are often re-branded by multinationals like HP. Compal’s gross margin in this quarter is only 3.26 percent.
The success of Chromebooks has forced Microsoft to drop its licensing fees on Windows 8.1 notebooks, in a move that is forcing down prices on the products and is good news for buyers.
According to financial analysts at Seeking Alpha, Samsung has decided to use an X86 processor for its Chromebook 2 – a win for Intel in the X86 stakes.
HP and Acer are already selling Windows 8.1 notebooks for less than $200 and that is likely to create something of a frenzy in the run up to the holiday period.
Seeking Alpha points out that Intel’s mobile chip unit posted an $1.04 billion operating loss for its financial third quarter, despite selling chips for 15 million tablets during that quarter.
Intel is attempting to make “significant reductions in contra revenues next year”, but the financial analysts say X86 mobile chips will carry on losing money.
Samsung has dropped using ARM based processors for its Chromebook in favour of Intel, but the bad news is that most market research shows that sales of tablets are slowing, particularly in mature markets.
Seeking Alpha said: “Intel is losing big money in its quest to sell 40 million tablet chips this year.”
Notebooks using the conventional Wintel model seem to be past history, but Chromebooks are selling like there’s no tomorrow.
That’s the conclusion of research by ABI Research, which said that shipments of Chromebooks soared by 67 percent in a quarter.
Acer is the top dog in the sector, followed by Samsung and HP – those three accounted for 74 percent of shipment share during the first half of this year. That isn’t going to change in the second half of this year, said ABI.
So-called vertical markets like schools are a driving force, and Chromebooks also sell well in emerging markets. But ABI said that North America will account for 78 percent of the Chromebook market and other regions such as Asia Pacific and Western Europe are set to grow shipment market share over the next five years.
Stephanie Van Vactor, an analyst at ABI, said that while Chromebooks might be a temporary fad like the netbook, but the price and design mean that it’s attractive to the world+dog.
“People are hungry for a product that is cost effective but also provide the versatility and functionality of a laptop,” she said.