New data from the International Data Corporation (IDC) reveals a significant drop of 10.7% in the traditional PC market in New Zealand during 2023. The IDC's Worldwide Quarterly Personal Computing Devices Tracker shows approximately 669 thousand units were shipped last year, indicating a sharp decrease in demand for desktops, notebooks, and workstations.

The report further breaks down the decline into different segments of the market. IDC highlights a significant slump in the consumer segment, down by 8.1% in 2023. According to IDC, this is mainly attributed to the challenging macroeconomic conditions, which have incurred negative effects and have been compounded by a local high-cost-of-living crisis. A record-high inflation rate was also noted at the end of 2022, carrying on into the early parts of 2023, which led to a reduction in consumer demand.

Commercial orders also plummeted, falling by 12.5% in 2023. IDC suggests businesses cut down their spending amidst uncertain economic conditions, resulting in elongated replacement cycles and, consequently, lower shipment numbers. The impact on the Small and Medium Business (SMB) segment was even more drastic, with a decrease of 21%, while educational sector demand spiralled downwards by 14.8%, particularly for Chrome- and Windows-based devices.

In contrast, Q4 of 2023 witnessed an 8% annual decline in overall PC shipments but had a silver lining in the form of a minor 6.7% uptick in the consumer segment owing to vendors stocking up for year-end promotions. However, commercial sector purchases continued to lag, reflecting ongoing market uncertainty. Anmol Bajaj, Research Analyst for Personal Computing Devices Research at IDC New Zealand, stated, "The consecutive interest rate hikes had adverse effects on the spending power of both the consumer and commercial segments, which further dampened demand for PCs, as evident from the declining shipments in 2023."

Nonetheless, IDC forecasts a modest upswing for the overall PC market in New Zealand, with a projected 2.4% growth in 2024. It anticipates a potential resurgence in the second half of the year following the launch of AI-powered PCs. The halt in interest rate rises observed in the latter half of 2023, and the impact of the new government could potentially improve consumer and business confidence as the year progresses.

This report reconfirms the importance of an optimistic economic climate for market growth. The traditional PCs discussed in this data include desktops, notebooks, and workstations but exclude tablets and x86 servers. IDC defines shipments as those made to distribution channels or end-users, with OEM sales accounted under the selling company or brand name.