China rose to the top of the PC market for the first time last year, dispatching the United States to second place by a lead of more than 3 million units, according to an IHS iSuppli PC Dynamics market brief from information and analytics provider IHS.
PC shipments in 2012 to China amounted to 69 million units, exceeding the 66 million total reached by the United States. Only a year earlier in 2011, the United States was the leading global destination for PCs of all stripes, including desktops and notebooks.
China’s PC market also displays distinct characteristics that set it apart from the PC trade elsewhere, possessing a vast untapped rural market and unique consumer-purchasing patterns. While desktop PCs lagged notebooks in the world., both PC segments were on par in China with roughly an even 50-50 split.
The level division in shipments between PC desktops and notebooks in China is unusual, especially as consumers today tend to prefer more agile devices—usually small and mobile in nature, as is typical in laptops—compared to bulky, stationary devices like desktops. The large percentage of desktop PC shipments in China is due to huge demand in the country’s rural areas covering Tier 4 to Tier 6 cities and embracing a still-substantial segment of the country’s 1.34 billion population. The market will change gradually as desktop PCs fend off strong competition from the high value proposition presented by notebooks, which will then surpass desktops in the country by 2014, tracking more closely with the worldwide desktop-to-notebook PC ratio of 36 to 64 percent.
The desktop vs. notebook pattern of consumption in China is only one example of the distinctive hallmarks of that country’s dynamic PC market. In another indicator, China also has approximately a 50-50 proportion in consumer vs. commercial PCs, compared to the 65-35 percent ratio for the rest of the world.
A third pattern unique to the China PC market is the preferred notebook size of 14 inches, which accounts for more than 70 percent of notebook PC shipments in the country. For the rest of the world, the 14-inch makes up less than 30 percent.
A fourth pattern of note is the attach rate of PCs with a pre-installed operating system, especially for notebooks. While mature PC markets in other parts of the world claim a 90 percent attach rate, the proportion for China comes out to lower than 50 percent, with the ratio even lower in the desktop PC market.
Despite such exclusive behavior, the China PC space shares one common trait with the worldwide PC market. Demand overall remains weak as consumers migrate to using mobile devices like mobile handsets, and the China PC market is projected to grow only by 3 to 4 percent this year,.
Even so, a vast market continues to exist for PCs in the country, in the form of potential first-time buyers mostly residing in the countryside. The government already plans this year to invest some 40 trillion yuan (equivalent to some $6.4 trillion) to build rural infrastructure in the next 10 years, and PC OEMs can take advantage of the initiative to build out and expand from the cities, IHS iSuppli believes.
China is also on track to retain its position as the largest PC market in the world for the foreseeable future—unchallenged and alone—further providing PC brands a rare opportunity for expansion, counter to the myriad travails they face in the rest of the world.