Notebooks Good - Chromebooks Ba
We have mentioned a slowdown in the Chromebook market a number of times, with the earliest indication being in our 8/16/21 note and again on 9/27/21 and 10/25/21, but our expectations for the decline in Chromebook demand now seems conservative as we aggregate data from a number of sources. We had expected a decline of ~17.5% q/q, which would still have implied a 3Q y/y gain of 5.2%. With a number of sources in thus far, it looks like the aggregate q/q decline is down~49.0%, putting 3Q y/y down 34.8%, far worse than our estimate and the first negative y/y growth quarter for Chromebooks. Some of the decline might be attributable to component shortages, but more likely the more extreme decline is due to delays or ending of new fiscal year budgets for student laptop/Chromebook programs, a number of which are ending are facing scrutiny as students in many countries are returning to class this fall.
Notebooks overall, of which Chromebooks comprises a share of 7.7% in 3Q (peaked out in 1Q of this year at 20.1%), have fared better, up 9.2% q/q and up 10.7% y/y , although it is the slowest notebook y/y growth since the pandemic began in 2020. The growth in notebook shipments came from some orders that had not been filled in 2Q due to component shortages and stronger corporate growth coming from those employees that have returned to a full office daily routine. As we have previously noted, retail notebook sales, the driver in past quarters, have slowed as student laptop programs become less necessary, so the question to be answered over the next two quarters will be “Will the corporate notebook expansion be able to offset slower retail notebook growth?”.
We expect notebook panel shipments to decline between 1% and 1.5%, as we noted in our 11/04/21 note, but worry that while anticipation of Chinese New Year (Feb. 1) and new notebook announcements at CES (Jan. 5) might keep notebook brand target expectations high into 1Q ’22, we are less sanguine about the overall notebook picture in 2022 as COVID-19 sequesterization (?) wanes. While we don’t expect a major drop in notebook shipments in 1H ’22, it will certainly become harder to see y/y growth against 2021’s strong COVID-19 related demand. While Chromebooks were the device of choice for on-line student programs, we expect they will fall back into a more normalized volume, showing lower unit volumes and very tough y/y comparisons. That said, we expect over the long-term, Chromebooks do represent a valid concept that is ideal for situations where most of the use is based on on-line applications and storage, especially if Chrome based applications that allow for data exchange between Microsoft (MSFT) applications continue to grow.
Notebooks overall, of which Chromebooks comprises a share of 7.7% in 3Q (peaked out in 1Q of this year at 20.1%), have fared better, up 9.2% q/q and up 10.7% y/y , although it is the slowest notebook y/y growth since the pandemic began in 2020. The growth in notebook shipments came from some orders that had not been filled in 2Q due to component shortages and stronger corporate growth coming from those employees that have returned to a full office daily routine. As we have previously noted, retail notebook sales, the driver in past quarters, have slowed as student laptop programs become less necessary, so the question to be answered over the next two quarters will be “Will the corporate notebook expansion be able to offset slower retail notebook growth?”.
We expect notebook panel shipments to decline between 1% and 1.5%, as we noted in our 11/04/21 note, but worry that while anticipation of Chinese New Year (Feb. 1) and new notebook announcements at CES (Jan. 5) might keep notebook brand target expectations high into 1Q ’22, we are less sanguine about the overall notebook picture in 2022 as COVID-19 sequesterization (?) wanes. While we don’t expect a major drop in notebook shipments in 1H ’22, it will certainly become harder to see y/y growth against 2021’s strong COVID-19 related demand. While Chromebooks were the device of choice for on-line student programs, we expect they will fall back into a more normalized volume, showing lower unit volumes and very tough y/y comparisons. That said, we expect over the long-term, Chromebooks do represent a valid concept that is ideal for situations where most of the use is based on on-line applications and storage, especially if Chrome based applications that allow for data exchange between Microsoft (MSFT) applications continue to grow.
Aggregate Chromebook Shipments - Source: SCMR LLC, Various
Total Notebook & Chromebook Shipments - Source: SCMR LLC, Various
Notebook Shipments & ROC - Source: SCMR LLC, Various
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