While the big drop in Apple Inc.’s Mac sales got most of the attention Monday amid the news that PC makers had yet another terrible quarter, another element of the quarterly stats included some more bad news for PC makers.
According to market researcher IDC, sometime later this year, PC makers are likely going to be paying higher prices for Chromebook licenses from Alphabet Inc.’s GOOG,
“At this stage, to the best of our knowledge, it’s not something Google has said publicly, but there are enough rumors around the supply chain that we are confident they are planning to raise prices,” IDC analyst Ryan Reith told MarketWatch. “Their licensing agreements would go up with any Chrome partners.”
Reith said he did not know how much the licenses are expected to risep, but that the market research firm is confident that a price hike is coming later this year, otherwise it would not have been mentioned in the press release about first-quarter data.
That abysmal quarterly report from IDC showed global PC shipments of traditional PCs fell 29% year-over-year in the first quarter, to 56.9 million. Apple grabbed a lot of attention because its drop in Mac sales exceeded the rest of the top 5 PC makers, with a year-over-year drop of 40.5% in the first quarter. IDC tracks Chromebooks, while the other big market research firm, Gartner, does not.
Also read: The PC boom and bust is over and it’s one of the books.
On Monday, shares of Apple AAPL,
Reith said he expects that the higher fees will lead to more sales of Chromebooks in the second quarter, and into the third quarter, as licensing partners stock up before the price hike takes effect, though Chromebooks will still remain a small fraction of the PC market. In the third quarter of 2022, for example, Chromebook shipments totaled about 4.5 million out of 112.5 million units.
IDC is still expecting total PC sales to decline about 10% to 14% for the full year 2023, with units expected to come in at around 255 million to 260 million. With the PC market slower, and heavily dependent on consumer and business spending patterns, the industry is using the sluggish time to find other manufacturing sources in an effort to wean itself away from low-cost manufacturing in China. But that effort, which began even before the pandemic exacerbated supply-chain issues, is going to take some time, Reith said.
“There is no question, there will be diversification of supply chain, but it is going to be a marathon,” he said. “It’s going to be a long time before real volume dependency moves away from China.”
It’s not clear yet if the anticipated hike in the cost of the Chrome licensing fees will be followed by others, such as Microsoft Corp. MSFT,