Inventory shortages, order backlogs persist as demand outstrips vendor capacity
While the COVID-19 pandemic keeps the world awash in bad news, PC vendors are experiencing an unexpected boost in sales as demand for PCs and Chromebooks surge as a result of more professionals working from home and students settling into a remote-learning paradigm.
While the demand is good news for PC vendors and partners, customers are experiencing the downside of inventory shortages and fulfillment delays, which is particularly problematic for the start of the school year.
The Lowdown: HP, one of the world’s largest PC manufacturers, saw its notebook sales surge 30% in the past quarter, while desktop PC and printer revenue declined 29% and 20%, respectively. Dell reported similar results, with PC sales increasing 25% on the spike in orders in the government and education sectors. And, according to NPD, Chromebook sales have climbed 20% to 40% each week since the beginning of the pandemic. Demand for PCs will continue, say analysts, as more people settle into working from home, businesses redeploy their workforces, and students return to school through either full- or part-time virtual instruction.
The Details: The downside of the pandemic-induced demand? Inventory shortages and fulfillment delays. Prior to the pandemic, the PC industry was already dealing with component shortages rippling through the Intel processor production shortfalls. As the pandemic disrupted the China economy first, manufacturing shutdowns exacerbated production stresses. PC manufacturers continue to struggle in producing enough product to meet the surging demand. When asked if the industry could meet the demand for Chromebooks, Acer America president Gregg Prendergast told Axios, “Not even close.”
The Impact: The demand, which HP CEO Enrique Lores describes as “unprecedented,” is a double-edged sword for PC vendors and their partners. Orders may still come in, but suppliers and sellers throughout the go-to-market chain won’t recognize revenue until shipping. Inventory shortages and back orders will cause customers to keep shopping around to find the products they need — including the refurbish market — causing missed sales opportunities. And component shortages that are being forecast through the holiday season may cause some buyers to defer purchasing altogether.