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CONTEXT Predicts a Challenging Year Ahead for PC Channel Sales

Marie-Christine Pygott, analyst at CONTEXT

The IT channel should be braced for much weaker performance in the PC market in 2020, with year-on-year sales likely to turn negative in the second half of the year, according to CONTEXT, the IT market intelligence company.

Analysing data collected from vendors, resellers and distributors, CONTEXT believes strong commercial demand for new hardware over the past year will gradually weaken after the January 2020 end-of-support deadline for Windows 7. Continued Intel CPU supply problems will compound these growth challenges for channel players next year.

Unfortunately, the consumer market is unlikely to see enough growth to compensate for this slump on the business side, with demand for mainstream desktop and notebook systems set to remain weak.

However, there are some positives for the year ahead: continued digital transformation efforts by organisations will spur investment in new machines, especially high-performance systems to handle data analytics and design applications.

Although this won’t prevent a decline in volumes it will help to drive up average prices and therefore margins.

On the consumer side, demand for thin and light notebooks, Chromebooks and gaming PCs is likely to stay strong, with new form factors like high-performance creator PCs also set to prove attractive to home users.

This will also push up average selling prices to counter the softer volume performance of mainstream machines.

In many ways it was a tale of two markets in 2019 with strong demand in the business sector while consumers decided to spend their money elsewhere”, said Marie-Christine Pygott at CONTEXT. “Although commercial demand will weaken after January as consumer sales remain focused around a small number of segments, there is optimism for the year ahead. Digital growth projects are set to continue apace for enterprises in 2020, driving up demand for high-end PCs, while new form factors could join the current crop of segments on consumer wish-lists, helping to improve channel margins.

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