EMS computing eyes Acer, HP battle PC shipments, market share

Acer overtakes Dell as aggressive pricing helps Asian PC makers. Lenovo, Toshiba contribute to 79.9 million PC’s shipped third quarter. Flextronics, Hon Hai control top shares in EMS computing sector.

Taiwan’s Acer, Inc. Taiwan rose to second place in the worldwide PC business in the third quarter of 2009, up from third place during the previous quarter. Acer supplanted Dell which declined to third place during the quarter.

Acer’s PC unit shipments soared by 16.6% in the third quarter of 2009 compared to the same period a year earlier and by 31% from the second quarter of this year. This caused the company’s share of worldwide PC unit shipments to rise to 13.4%, up from 12% in the second quarter of 2009 and up from 11.6% in the third quarter of 2008 according to research and consulting firm iSuppli.

“Acer’s rise to the No. 2 rank in the global PC business reflects not only its strong performance in the notebook segment, but also the historic rise of Asia as a primary force in the computer industry,” said Matthew Wilkins, principal analyst, compute platforms research, for iSuppli.

iSuppli goes on to say in the company’s press release that Acer’s shipments of notebook personal computers rose by 17% in the third quarter of 2009 compared to the same period in 2008 and by 28% from the second quarter of 2009.

iSuppli feels Acer’s success is due to its continued aggressive pricing strategy, its strong netbook shipments and its robust regional performances in both the European and U.S. markets.

Acer’s strong performance in the third quarter was paralleled by fourth-ranked Lenovo of China, whose personal computer shipments rose 17.2% compared to the same period a year earlier, the largest increase among the top 5 OEMs during the period.

“The third-quarter performances of Acer and Lenovo are just the latest development in the long-term rise of Asian manufacturers in the global PC market,” Wilkins said. “These companies have made major strides in the PC market in recent years, with Acer rising from the sixth rank in 2003 and Lenovo advancing from the No. 8 position during the same year. The Asian manufacturers are a growing force in the global PC business due to their aggressive pricing along with their ability to quickly react and embrace new developments, such as the netbook PC.”

The table below represents iSuppli’s estimate of global PC market share in the third quarter of 2009. (See also article titled: Report: Changing PC sector, market share, emerging markets,for additional reading)

Q309 Total PC Top 5 unit shipment market share rankings (Thousands of units)

PC Top 5 unit shipment market share rankings


EMS / ODM and computing end-market segment
According to industry research firm IDC, the EMS / ODM computer segment (combined) should reach revenues of $99 billion in 2009.

IDC forecast: Combined EMS and ODM worldwide computer segment revenue

EMS and ODM worldwide computer segment revenue combined


Electronics manufacturing services (EMS) companies Flextronics and Hon Hai will maintain the computing sector’s share of the segment as they compete for notebook contracts.

For original design manufacturers (ODM), the popularity of netbooks has attracted a significant amount of attention as they weathered the worst business conditions they have experienced this decade.

“Various pressures will continue to threaten electronics contract manufacturers’ opportunities in this segment. Margins for notebook manufacturing have been falling, and will be further impacted by netbooks and competition form EMS firms”, says Michael Palma, senior research analyst EMS and consumer device semiconductors with IDC.

“Currently, there are five tier-1 notebook ODMs, but with several tier-2 ODMs doing well with netbooks and the two primary PC EMS firms moving into notebooks, the industry has to ask: “Will there be enough room for all of these competitors?”, adds Palma

Top 5 EMS / ODM market share for computers
IDC’s Palma also added, “the tier 1 EMS / ODM companies in the computer segment consolidated their share of the segment’s revenues as they sought scale to improve their return on investment as costs rise and OEMs continue to apply pressure to reduce costs.”

The table below represents IDC’s run down on the Worldwide EMS industry’s computer segment market share by EMS / ODM company type for 2008.

EMS industry’s computer segment market share by company type


In looking at the table above, it is important to note that ODM company ASUSTeK spun off its ODM groups as Pegatron (for systems) and Unihan (for handhelds) and Unihan became a subsidiary of Pegatron in May, 2008 with transfer of Unihan stock to Pegatron.

Many in industry still view the three companies as a combined entity because ASUSTeK currently retains 100% ownership of Pegatron and Unihan and the three organizations still operate in certain respects as a single company.

Q3 2009 rebound
Looking deeper at the PC sector, iSuppli says third quarter for 2009 also marked two other significant milestones for the PC market.

First, unit shipments rose on a year-over-year basis for the first time since the fourth quarter of 2008. Second, shipments increased at the highest sequential rate since iSuppli began tracking the market in 2003.

Worldwide PC shipments in the third quarter amounted to 79.9 million units. This represented a 1.1% increase from the third quarter of 2008 and a 19% surge from the second quarter of 2009.

“The sequential and year-over-year shipment increases show that the PC industry emerged from the downturn and began to grow again in the third quarter,” Wilkins said. “Notebook PCs were critical in driving growth on both a sequential or a year-over-year basis. In fact, during every quarter of the economic downturn, the worst since the Great Depression, notebook PC sales always managed to generate growth compared to the same period a year earlier. This is a testament to the high value that consumers and businesses place on their mobile computing platforms.”

Slump not as bad as previously thought
Following the strong third quarter, PC market conditions appear likely to remain strong in the fourth quarter according to iSuppli.

“With the start of the Christmas buying season and the arrival of Microsoft Corp.’s Windows 7 operating system, the fourth quarter is likely to bring more good news for PC makers,” Wilkins said.

Given the strong results in the third quarter, iSuppli has revised its 2009 PC unit shipment forecast to a 0.9% decline, compared to the previous forecast of a 4% decrease.

Top 5 developments
U.S. PC OEM Hewlett-Packard extended its unbroken run of No. 1 rankings to 13 quarters with third-quarter shipments of 15.9 million units, up 7% from the third quarter of 2008, giving it a market share of 20%.

Third-ranked Dell saw its shipments decline to 10.3 million units, down 5.9% from 10.99 million in the third quarter of 2008. Dell’s share of worldwide PC unit shipments amounted to 12.9% during the third quarter.

“Despite double-digit growth in consumer PC unit shipment, Dell’s results were dragged down by the continued challenges in the commercial sector,” said iSuppli’s Wilkins.

No. 5 Toshiba of Japan achieved 9.7% growth compared to third quarter of 2008, giving it a market share of 5%.

Source: iSuppli,, December 2009

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