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COVID-19 recession looms for PC market

The PC market will likely contract as 2021 nears, analysts say. The second quarter was a positive one for PCs, as companies bought laptops to enable remote work.

Remote work demand spurred growth in the PC market last quarter, but industry observers warned that the rise could be a mirage in the face of a protracted recession brought on by the COVID-19 pandemic.

Both Gartner and the IDC last week reported higher PC shipments in the second quarter of 2020. However, researchers said businesses would likely tighten their belts soon because of economic uncertainty.

Mikako Kitagawa, a research director at Gartner, said the PC market would probably decline beginning in 2021, as businesses face a recession. She said she expects growth to continue this year, but at a slower pace than in the second quarter.

Mikako Kitagawa, senior principal analyst, GartnerMikako Kitagawa

Kitagawa said restocking by distributors accounted for some of the second-quarter jump. She added that enterprise demand remains strong as COVID-19 linger, with businesses still gearing up for remote work.

Linn Huang, a research vice president at IDC, said inventory replenishment and the recovery of China's supply chain bolstered second-quarter shipments after remote work ate into the post-holiday stock of PCs.

With infection cases soaring, governments may consider new shelter-in-place orders, Kitagawa said. Indeed, California brought back some of its pandemic-related restrictions on Monday in reaction to higher caseloads and hospitalizations.

Businesses are likely to continue spending this year to shore up plans to cope with disruptions, she said. Some firms are using their full purchasing budgets -- and are even spending money allocated for the next year's budget -- to ensure continuity.

As a result, spending is likely to slow next year, Kitagawa said. The extent of the downturn will depend on whether the country is thrown into a long-term recession because of the pandemic.

Huang said he believes the demand will soon taper. The need for remote work PCs has carried into July, and he expects it to continue through at least the end of the month. He added, though, that the spending will run into the "brick wall" that is the recession.

Details on the second-quarter bump

According to IDC, PC shipments in the second quarter increased 11.2% year over year, while Gartner cited a 2.8% increase. The research firms differ in the types of devices they include in the category.

The top manufacturers in the quarter were HP and Lenovo, with each claiming about a quarter of the market. Dell, Apple and Acer round out the top five.

Notebook PCs -- key tools in remote work -- drove the PC market increase. Shipments of those devices grew by 24% year over year, while desktops fell by 26%, according to research firm Canalys.

The higher shipments were a stark contrast to the first quarter of the year. Both Gartner and IDC reported steep year-over-year drops then, blaming supply chain disruptions caused by the COVID-19 pandemic.

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