“Korea’s LG Electronics is said to be preparing to exit the traditional PC market, as worsening margins and sales make it uneconomic, presaging a shift to tablets, smartphones and ‘hybrid’ PCs,” Charles Arthur reports for The Guardian. “According to the Korea Times the company has even considered a wholesale exit from Windows PCs as its sales have shrunk. The conglomerate is struggling to turn itself around as a number of its divisions compete in low-margin sectors such as TV and displays.”
Read more in the full article here.
“The news that LG is considering quitting the traditional Windows PC business isn’t surprising. LG has always been a bit player in the PC market, with shipments of at best a few million PCs per year – in a market where the largest companies would expect to shift 10 times more,” Arthur reports in a related article. “As one unnamed LG employee told the Korean Times, exiting the PC business makes sense: ‘it doesn’t make sense to put more resources into the money-losing business.'”
“It’s not just LG that’s hurting. The PC business is in a slump which has seen year-on-year shipments (and so sales) of Windows PCs fall for five (imminently, six) quarters in a row, after seven quarters where they barely grew by more than 2%,” Arthur reports. “And it’s not only growth that’s fallen. Analysis by the Guardian suggests that as well as falling sales, the biggest PC manufacturers now have to contend with falling prices and dwindling margins on the equipment they sell.”
“My research took published data from the quarterly financial figures for HP, Dell, Lenovo, Acer and Asus, which together make more than 60% of the world’s Windows PC shipments,” Arthur reports. “The data shows that the weighted average selling price (ASP) of a PC has fallen from $614.60 in the first quarter of 2010 to just $544.30 in the third quarter of 2013, the most recent date for which data is available. Even worse is the profitability… By the third quarter of 2013, the weighted average profit had fallen to $14.87… Macs have an 18.9% profit margin… That metric gives a hardware per-[Mac] profit which has dropped from $241 to $232 – an erosion, certainly, but a margin that Windows PC makers would kill for: it’s more than 10 times greater than their per-PC profit.”
Much more in the full article here.
MacDailyNews Take: This chart is a year old. The situation likely looks better for Apple and worse for the PC box assemblers today:
[Thanks to MacDailyNews Readers “Fred Mertz” and “Edward W.” for the heads up.]
Apple Mac sales surge worldwide – January 10, 2014
Gartner: Apple’s U.S. Mac sales surge 28.5% as Windows PC market drops 7.5% – January 9, 2014