The Canadian Assembler PC Market: Fourth Quarter 2008

Despite the tough economic conditions, the Canadian microcomputer industry concluded the year with satisfactory results.   During Q4 2008, unit sales of notebooks, desktops and servers were 11% higher than in Q3 2008.   This increase, however, was only achieved because of the netbook.  During Q4 2008, roughly 110,000 of these bargain-basement devices were sold.  Without this new, novel category shipments would have been lower than the year before.

Exhibit 1: Total Microcomputer Shipments by Quarter: 2007 – 2008

The netbook is a category with a loose definition and an uncertain future.  Netbook screens are less than 10” wide and the hard drive capacity is limited.  Products selling for less than $400 are acknowledged to be netbooks. Those selling for more than $500 are positioned as notebooks.   The first Netbooks used Linux or Windows XP home edition instead of Vista.   The Linux offerings, however, disappeared from Tier One retail outlets after one quarter of experience.  Netbooks also lack optical drives, which may reduce costs, but prevents the consumer from using the device to view movies or play games.  The lack of an optical drive is the prime reason why consumers return the netbooks after purchase.  The retailers want optical drives in the units and will likely have their way before very long.  All in all, the netbook is rapidly evolving into a notebook at a low price point. 

Because of the netbook (and only because of the netbook), total shipments were higher during Q4 2008 than during Q4 2007.  Unfortunately, the industry does not have a new, low-end category for the commercial buyers who will dominate the Canadian market during the next two quarters.  It now seems likely that in the first two quarters of 2009, the year-over-year rate of decline in shipments will approach 10%.  Hopefully, the rate of decline will fall into the low single-digits during the second half of the year. 

Exhibit 2: Microcomputer Shipments by Quarter: Q1 07 – Q4 08

HP led the market during Q4 2008, but its lead was 5% less than during Q3 2008.  HP suffered badly from a sharp downturn in demand in the commercial sector.  The second factor that caused HP to lose market share, was that it entered the netbook segment very late and captured only a minor portion of this hot new sub-segment.

Exhibit 3: Canadian PC Market Share Q4 2008

Acer did very well in Q4 2008.  It led both the netbook and the overall mobile category.  Also, Acer posted very good results in the desktop segment, where some of its rivals overestimated the desktop rate of decline and failed to bring adequate quantities into the country.

Exhibit 4: Microcomputer Shipments by Vendor: Q3 08 vs. Q4 08

Toshiba performed splendidly during Q4 2008.  Its unit shipments were 40% higher than in Q4 2007.  Toshiba has adapted as well as any firm to the new realities of the market place.  It launched its netbook line early in the quarter.  At the same time, it had large quantities of conventional notebooks available at attractive prices.