Desktop Sales Skyrocket, ASPs Rise

The NPD Group released a statement today that points toward surprising growth in desktop sales this past February. Historically, desktop sales have trended steadily downwards for the past ten years; notebook shipments first surpassed desktop shipments in 2008. New data suggests the pendulum has oddly swung the other way—desktop unit sales were up 30 percent in February, while desktop-derived revenue grew by 33 percent.

Part of what makes the jump odd is that there doesn't seem to be a reason for it. Our first thought was that OEMs like Dell and HP could have slashed prices on their Core 2 Duo desktops to make way for the Core i3/i5 products Intel launched in January, but desktop ASPs were actually 11 percent higher ($670) than their notebook counterparts ($602.) NPD's vice president of strategic analysis, Stephen Baker, attributes this growth to Windows 7, writing: "Windows 7 is propelling the PC side of the market where desktop ASPs have been higher than notebook/netbook ASPs in three of the last four months."

Baker attributes the growth in desktop ASPs to the success of low-cost notebooks and netbooks, which have replaced desktops as entry-level systems for first-time buyers. "With consistent offerings under $400, partly in response to the netbook challenge and partly in response to competitive activity in the industry, notebooks now make up the lion’s share (64 percent of the non-netbook under $400 PC market in the six months ending Feb 2010 and one-third of the 4.4 million computers sold at retail for less then $400 in that February notebooks under
$400 nearly outsold netbooks." If Baker is right, it implies that the line between notebook and netbook is getting quite blurry around the $300-$400 mark.

Dell's new Inspiron Zino. Could be selling well, but NPD doesn't break out the nettop market.

Given the fact that a majority of US households own a computer and have access to the Internet, it makes sense that 'first time' buyers, especially students, would gravitate towards a mobile system rather than a second desktop. We're not as willing to tie Windows 7 and desktop unit sales together. Historically, no Microsoft OS since Windows 95 has created a sustained uptick in PC sales. A number of analysts predicted a pent-up demand for Win 7, but we'd have expected that boost to mostly appear in the fourth quarter of 2009. The economic conditions of the past 18 months also make us leery of drawing monocausal conclusions—things may be improving, but they're scarcely wine and roses for a lot of people.

NPD rosily predicts "solid ASPs, better demand, and a strong upgrade path...2010 is likely to see the best growth rates for consumer desktops in years." We're all great fans of desktops here, but given how badly PC sales slumped in early 2009, we're not convinced that the February jump is more than a blip. Desktop revenues have grown in three of the past four months after 21 months of decline—we'll wait for a few more months of economic stability before concluding that desktops are experiencing a sort-of renaissance.