Citi Research is revising its forecast for negative PC growth as it paints a dark picture of the incredible shrinking PC market.
Citi is cutting 2013 PC year-to-year growth to negative 10 percent from negative 4 percent growth, according to a note to investors late Friday.
"The Citi global technology team is revising down its 2013 PC growth estimate to -10% y/y (from -4%) based on further sub-seasonal demand" in the first quarter and slowing notebook production.
In a section titled "Y/Y Growth in 2H? Don't Think So," Citi says that despite investor optimism on a resumption of year-to-year growth in the second half of 2013, "we do not expect [PC] units to grow" due to a "softening in PC end-demand" and "muted benefit from Haswell and Windows Blue [Windows 8.1]."
In short, no uplift from Windows 8.1 or Haswell -- Intel's newest processor.
Citi was not impressed by product rollouts at Computex centered on Haswell.
We do not see any meaningful catalysts near-term supported by our product and company meetings at Computex in Taiwan last week which revealed a focus on convertible & higher-end Ultrabooks running Haswell, which addresses the smaller premium notebook market. We also believe investors will be disappointed when they learn that low-priced touch-capable notebooks (sub-$600) will not be available to consumers until 4Q13.
Here's the scary part for PC companies. "While we had previously modeled a +2% y/y growth in PC units in 2014-2015, we now expect cannibalization from tablets...to more than offset any 'stabilization' in demand resulting from stretched replacement cycles or more compelling notebooks."
If the market plays out this way in the coming years, that's a one-two punch for PC vendors: no hoped-for uptick from companies replacing older PCs and no return of demand due to fresh designs.
Tablets will surge in 2013, as the PC market collapses, er, shrinks, according to Citi's Global PC Shipment Forecast:
- Tablets: 237 million units forecast to ship this year vs. 144 million in 2012.
- Notebooks: 179 million units vs. 201 million in 2012.
- Desktops: 137 million units vs. 148 million in 2012.
And what about emerging markets? "Overall, we think the real issue lies in the emerging markets where we are seeing further demand deterioration primarily driven by the shift towards inexpensive tablets."
Everyone is affected in emerging markets, even Apple. "We point out that this trend is significantly impacting Apple's position in the tablet market as iPad's share has shrunk to below 40% in 1Q13 compared to 57% just a year ago."