HP and Dell report cooling PC sales as business demand falters

Dell and HP reported slowing demand for business computers at the end of the pandemic-era PC market boom.

The companies recently warned investors that while commercial PC sales increased last quarter, corporate appetite for computers has slackened. Executives from both companies cited economic uncertainty as a driver of flattening business demand. Inflation and high energy costs raised fears of a recession.

“We saw a significant shift in business sentiment during the quarter as companies delayed and scaled back orders, Dell co-chief operating officer Chuck Whitten told investors Aug. 25.

HP also saw delays in orders, HP CEO Enrique Lores said on an earnings call on Tuesday, according to a Seeking Alpha transcript.

The city of Happy Valley, Oregon, plans to slow down its PC purchases, said Chief Information Officer Will Wilson. During the pandemic, the city accelerated its typical four-to-five-year computer replacement cycle to handle remote work. As a result, he now has many laptops purchased over the past two years.

“It restarted the clock, if you will, for these systems going forward,” he said, noting that Happy Valley would return to its usual replacement schedule.

Another municipality, the city of Corona, California, intends to spend less on computers as it has adopted cloud-based virtual office technology. Moving processing load to the cloud has reduced the need to equip employees with high-performance machines, which means the city can use inexpensive devices and replace them less often, said CIO Chris McMasters.

“[We’ve run] engineering [computer-aided design] tablet systems, for example, which usually require serious hardware,” he said.

The PC market recently saw its two-year winning streak come to an end, with many companies fully stocked with new PCs and fears of a recession driving down costs. Global shipments of desktops, laptops and workstations have fallen over the past two quarters, research firm IDC reported. Slumping consumer demand drove much of last quarter’s 15.3% decline, but analysts also saw a drop in business purchases.

Although commercial buying has cooled, it will likely be more resilient than the mainstream market, said IDC analyst Jitesh Ubrani.

“We believe that large companies are better positioned to weather the economic storm” than consumers, he said. “As a result, they are more likely to delay purchases rather than let demand perish completely.”

Despite the slowdown, the PC market floor is higher than in pre-COVID years, Ubrani said. Hybrid working, hardware replacement cycles, and the end of support for Windows 10 will drive the need for new computers in the years to come.

The slowdown in purchases doesn’t mean computers have lost the importance they gained during the pandemic, Lores said.

“PCs are far more relevant today than they were three years ago,” he said.

HP and Dell were the second and third largest PC makers in the second quarter of 2022, according to IDC data.

Mike Gleason is a journalist specializing in unified communications and collaboration tools. He previously covered communities in the MetroWest region of Massachusetts for the Milford Daily News, Walpole time, Sharon’s lawyer and Medfield Press. He has also worked for newspapers in central Massachusetts and southwestern Vermont and served as local editor of Patch. He can be found on Twitter at @MGleason_TT.

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