IDC had expected a quiet quarter as channels focused on clearing out Windows 7 inventory to make space for Windows 8. Continued pressure from other products such as tablets and smartphones, as well as uncertainty over the impact of Windows 8 and the economic outlook, contributed to depressed shipments - largely as expected. Nevertheless, despite an already conservative outlook, the results show the vulnerability of PCs and the loss of mindshare among buyers who until recent years have flocked to back-to-school promotions in the third quarter for PCs. Familiar and persistent factors such as renewed economic issues and budget diversion into other devices also played a part. As a result, all regions saw shipment volumes decline from a year ago.

"PCs are going through a severe slump," said Jay Chou, senior research analyst, Worldwide PC Tracker. "The industry had already weathered a rough second quarter, and now the third quarter was even worse. A weak global economy as well as questions about PC market saturation and delayed replacement cycles are certainly a factor, but the hard question of what is the 'it' product for PCs remain unanswered. While ultrabook prices have come down a little, there are still some significant challenges that will greet Windows 8 in the coming quarter."

"We expected a weak PC market in the lead up to Windows 8 release in the fourth quarter. While the industry has been focused on shaving excess inventory and preparing to launch a new generation of products, consumers have been looking at alternative devices like tablets. In addition, businesses have slowed their refresh cycle as they remain concerned about the broad economic outlook, amid a busy political season," said David Daoud, research director, Personal Computing at IDC. "Nevertheless, as vendors line up innovative new products and designs, consumers are likely to respond positively during the tail-end of 4Q12, and that means a potential return to positive growth at the end of this year."

Regional Outlook

United States - The U.S. market came in slightly weaker than an already negative forecast, contracting 12.4% compared to a forecast of -9.5%. This reflected weaker consumer demand, including a weak back-to-school season, and an industry-wide inventory clean up. The consumer segment was particularly affected as buyers focused on competing products. Demand in the commercial sector was subdued by weaknesses and uncertainty in the broad global economy amid a heated presidential election season. However, IDC believes that the fundamentals for some recovery exist. With the launch of Windows 8 in 4Q12, we expect shipment growth to return to mid-single digits in the fourth quarter and into next year.

EMEA - The EMEA market remained constrained as expected in the third quarter. July and August saw low sell-in levels as vendors focused on ensuring leaner inventory levels after a strong 2Q12, while September sell-in was boosted, as anticipated, by the production of new Windows 8 systems and an attractive ultrabook and ultra slim line up set to hit the shelves end October. Continued economic pressure in the business space and competition from other devices for consumers, however, combined to keep the supply chain and buyers cautious.

Japan - Japan was one of the stronger markets, benefitting from rebuilding efforts. Unfortunately, this "strength" was only relative to other markets - achieved with shipments still falling short of flat from a year ago.

Asia/Pacific (excluding Japan) - The region continued to contract on a year-on-year basis, though growing sequentially from 2Q12. China was mostly on target but the rest of the region came in below expectations as ongoing economic sluggishness and competing device distractions weighed on PC spending this quarter.

Vendor Highlights

HP saw shipments contract more than 16% from a year ago and narrowly held on to the top vendor spot. Distractions caused by its reorganization, challenges in integrating its enterprise acquisitions, and an unclear strategy to regain its course remain key obstacles.

Lenovo, despite slowing growth in Asia, continued to register the highest yearly growth among all top vendors. The vendor maintained its methodical approach to build out channel partnerships and acquire key OEMs in markets outside it home turf, with varying degrees of success. Its persistence as well as missteps of its rivals helped Lenovo to maintain a top 5 position in the U.S., and gain a couple points of share to nearly tie HP for the lead in global shipments.

Dell faced a tough quarter, dropping below its own 2Q12 shipment volume. The vendor saw share declines in all markets and ended the quarter with a 14% decline. Tepid PC refresh activity in the U.S. and EMEA continued to be a key inhibitor for Dell. Although the company has made strides in other areas, with Asia/Pacific becoming its second biggest market after the U.S., its momentum there has also been curtailed by a cooling market.

Acer Group - the vendor has faced an uphill climb to get back into growth mode since the market for low-priced notebooks dimmed. The third quarter was no different, with shipments registering a sequential decline and disappointing notebook volume. However, Acer's aggressive foray into ultrabooks and Windows tablets could help to reverse its fortunes if Windows 8 finds solid acceptance.

Top 5 Vendors, Worldwide PC Shipments, Third Quarter 2012 (Preliminary) (unit shipments in thousands)