By Matt Ashare |
Belt tightening hasn’t taken a big bite out of IT budgets. Most companies are upping tech spend, leaning into modernization, cloud and software.
But analysts tempered expectations in January. As companies moved to trim discretionary spending and delay purchases, Gartner revised its growth estimate, scaling it back by several percentage points to 2.5% for the year.
Enterprise spending in the U.S. is expected to slow to 5.4%, down from 7.4% last year, according to Forrester, a trend that adversely impacts PC manufacturers.
The PC market boomed during the pandemic, as companies invested in tech to support remote work.
Spending on laptops peaked in 2021, Peter Tsai, senior technology analyst at Spiceworks Ziff Davis, told CIO Dive in an email. Refresh cycles for PCs and laptops have some built-in flexibility, but replacements can’t be put off indefinitely.
“Roughly half of the laptops purchased in early 2020 during the pandemic-driven rush to remote work will be up for renewal within the next 12 months,” Tsai said.
The three biggest players in the global PC market — Lenovo, HP and Dell — took significant hits last year, when PC shipments stalled and then plummeted.
“We do see some companies delaying purchases, and when you combine that with a lot of large enterprise layoffs it equates to slower commercial PC sales,” Ryan Reith, program VP of worldwide mobile device trackers at IDC, told CIO Dive in an email.
Dell, the third largest player last quarter, with 16.7% of the global market, saw shipments decline by 37% versus the same period last year. The company announced a 5% workforce reduction, which will eliminate approximately 6,650 positions, in a Monday Securities and Exchange Commission filing.
The device maker also paused hiring, limited travel and reduced outside service spend, vice chairman and co-COO Jeff Clarke said in Monday memo.
“We have further opportunity to drive efficiency through department reorganizations, which has resulted in a reduction of team members across the globe,” Dell told CIO Dive in an email. “This is a difficult decision that was not made lightly.”
The wait for enterprise purchases to ramp back up may be longer than initially expected, Reith told CIO Dive.
“IDC’s forecast from November had the commercial PC market starting to recover late this year,” Reith said. “But in our next update, it’s going to look more like a 2024 story.”
