Global top-five brand vendors together and top-three ODMs combined both enjoyed over 25% on-month rebounds in May shipments with Hewlett-Packard (HP) and Acer both seeing over 60% growth. The two brand vendors’ strong performance also boosted shipments for their ODM partners Quanta Computer and Compal Electronics by around 30% on month. The shipments do not include detachable notebooks.
Notebook shipments’ strong growth in May was mainly because most excess inventories from the previous month had been digested, while demand from enterprise and consumer markets started rising after Microsoft stopped providing support for Windows XP.
HP and Acer, which made large adjustments in their April inventories, enjoyed giant growths in May. In addition, some of Acer’s ex-retail channel partners also started re-placing orders with Acer, helping the company’s shipments in May to reach a new high since April 2013, and returning the company back as the fourth-largest notebook vendor.
Lenovo and Dell also achieved growth in the month, but both less than 20%. Asustek Computer, after enjoying several months of growth, maintained its May shipments at April’s level (not including the T100). The top-five notebook brand vendors together had an on-month growth of 32% in May.
Compared to the same month in 2013, the top-five notebook brand vendors achieved 13% shipment growth, the third time they achieved growth in 2014, and also the third time the percentage surpassed 10% since 2013.
Since the growth was contributed by factors such as the digestion of excess inventories, the launch of new products, and a demand boost by Microsoft’s stoppage of Windows XP support, Digitimes Research believes the evidence is not strong enough to say that the notebook industry has returned back to growth.
Wistron had a less than 10% on-month growth in May. Although the ODM saw increased orders from Dell, the boost was offset by decreased orders from Acer.
Inventec, which had unsatisfactory shipment performance in April, saw an on-month growth of 25% in May thanks to HP’s orders. Pegatron Technology was the only ODM among the top-five to see a drop in shipments in May with a volume of less than 800,000 units because Asustek shifted some of Pegatron’s orders to Quanta.
Following Asustek’s T100 detachable 2-in-1 release in the fourth quarter of 2013, which achieved 500,000 units of shipments in one quarter and received good feedback from consumers, Acer launched its Switch 10 in May to join the competition.
Digitimes Research estimates that Wintel 2-in-1s, which turned to target the entry-level consumer market, will have a chance to ship one million units in the second quarter. However, vendors are expected to face issues over balancing prices and specifications as they turn to focus on models with larger size displays in the second half. The problems may also affect the estimated shipments of five million Wintel 2-in-1s in 2014.
As tablets are significantly impacting notebook demand, notebook brand vendors have been releasing new notebook products, hoping to regain their momentum. However, products such as ultrabooks, touchscreen notebooks and Wintel-based detachable notebooks have all failed to drive consumer demand in the short term.
2-in-1 devices have experienced three phases of market positioning and product design changes. In the first phase, vendors simply changed the industrial design of Android-based tablets to feature an detachable keyboard to try out consumer response.
In the second phase, Microsoft and Intel joined the competition and focused on pushing 2-in-1 devices’ performance and enterprise value, but did not acquire consumer recognition.
In the third phase, Microsoft and Intel turned their target back to the consumer market and are not pushing high-end specifications and expensive prices as in the second phase.
The next 2-3 quarters will be a critical period for Wintel detachable 2-in-1s as 10-inch 2-in-1 devices will face fierce competition from tablets, while related vendors, which are turning to larger-size models to expand business opportunities, need to focus on balancing large-size detachable 2-in-1 product prices and specifications.
If large-size detachable 2-in-1s are not strong enough in specifications to take over demand for conventional notebooks, the devices are expected to struggle due to having no specific market position, which will limit shipment performance in 2014.
The balancing and market position issues will continue to exist in 2015. In addition to Asustek and Acer, whether other brand vendors will be willing to aggressively invest in detachable 2-in-1 products, will become a key factor that affects the market’s future growth since the product line is only able to contribute limited profits. Even if shipments are able to break five million units in 2014, volumes will still have trouble surpassing 10 million in 2015.