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CONFIDENTIAL gapAnalysis: Q1 2016 Desktop PCs Retail Overview - (May 02, 2016) Throughout Q1 2016, the retail panel tracked by gap intelligence featured 314 distinct desktop placements, up 13% from 276 during the same quarter last year. Much of this growth is attributed to product expansion at Fry’s Electronics that increased from 139 placements in Q1 2015 to 190 placements in Q1 2016. This increase in product placements at Fry’s Electronics could be attributed to the increase in popularity of gaming desktop computers that has been growing over the past year. The importance of gaming in the retail channel is exemplified by iBUYPOWER entering Best Buy for the first time in August 2015 (see also: First iBUYPOWER and HP Desktops Pre-Installed with Windows 10 Arrive in Best Buy BTS 2015 Refresh August 10, 2015). Since then, the manufacturer has claimed three placements on the retailer’s shelves. Notable year-over-year shelf changes are the clearing of Acer from Best Buy’s shelves, the addition of iBUYPOWER to Best Buy, and the growth of Lenovo at multiple retailers. Additionally, Lenovo re-entered Costco at the end of 2015, appearing at the retailer for the first time since 2012 (see also: Costco Adds New Tower Families From Lenovo and Dell November 16, 2015).
gap impact summary: • Industry changes in gaming and AIO size result in shifts of brand presence • Price bands expand across most brands
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2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
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Form factor share remains stable despite other changes
Non-weighted distribution by brand in Q1 2016 was more evenly distributed than in previous quarters. HP continued its historic domination of the US retail shelf, however, other brands were distributed differently than previous quarters. Acer’s decrease in shelf share, and “other” brand increased as a result of gaming desktop placements caused by the shift in the brand distribution among the smaller manufacturers. The graph below does not include Fry’s Electronics because the data from Fry’s skews the results and does not provide an accurate representation of the overall US retail market. Although HP continued its dominance in retail placement share, as IDC and Gartner reported in Q1 2016, Dell overtook HP in retail shipments for the first time in over six years (see also: Gartner and IDC: Global PC Market Shows Q1 Declines April 18, 2016). This shift may indicate that although there are more HP desktops on retailers’ shelves, Dell desktops are bought more frequently. Dell’s shipment growth could be due to the increased popularity of Dell’s Alienware gaming computers, but it is unclear in the IDC/Gartner reports whether Alienware is counted as part of Dell or as a separate entity. Another important aspect to note is Acer’s small share, decreasing to just 4% when the company had 9% share during the same period last year. There has been a general decline of Acer products in US retail recently with the company clearing from Best Buy completely. The company’s shelf share has declined due to lack of new products entering the channel. As indicated at the next@acer press event, the company has shifted its focus from general consumer desktops to its gaming products, including Predator line desktops and monitors (see also: Next@Acer Press Desktop Event Recap April 25, 2016).
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2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL When looking at retail brand presence compared YoY, HP, Lenovo, and Apple all saw placement growth in the retail channels. Lenovo’s growth is due to expansion of products at Office Depot, and the re-entrance to Costco at the end of 2015 as referenced above. The increase in placements for Apple is the result of additional Retina display options of existing Apple AIO products at Fry’s Electronics, adding to rather than replacing previous models. Samsung saw increased placements due to the addition of its 27-inch curved AIO that arrived in retail channels in November 2015, as well as the Samsung Galaxy View portable AIO (see also: Best Buy Updates High-End AIO Assortment November 09, 2015 | Samsung Galaxy View Makes Retail Debut November 16, 2015). The drop in Asus products is due to decreased presence at Best Buy in Q1 and the manufacturer leaving Staples. Asus products have been increasing recently at Best Buy meaning its placements could increase into Q2 2016 (see also: Towers from Asus and iBUYPOWER Added at Best Buy April 25, 2016).
When looking at desktop price band by brand, it is apparent that there has been an increase in higher-priced items across the board. This increase in high-end price bands, especially products priced over $1,000, is due to the addition of larger AIOs such as 27-inch and 34-inch models, whose bigger screen sizes result in higher prices. These high priced items include the HP Envy 34a010 available for $1,799 or the Lenovo Yoga Home 900 available for $1,400. Additional increases in gaming desktop placements further added to high-end price expansion, since the average gaming desktop is priced over $1,000.
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL Interestingly, Lenovo is the only manufacturer that did not increase its product share in the $1,000 and above price band, choosing instead to increase placements in lower price bands, namely the $250 and under and the $600-799 categories. The increase in the low end is due to the investment of Lenovo in mini-PCs, which are now available across multiple retailers. Additionally, Lenovo increased its shelf share at Office Depot, resulting in the increase of $600-799 products, the price band most commonly found at the retailer. As seen in the brand share chart, the strategic expansion of these particular price bands earned Lenovo 15% share of the US retail shelf, an increase from 11% seen the same time last year. Apple increased its high-end price band with the addition of 27-inch AIOs with Retina display that start at $1,499. “Other” brands also increased in the $1,000 and above category as more gaming desktops entered the market such as those from iBUYPOWER, Alienware, CyberPower, and CybertronPC.
This increase in products with higher prices across all manufacturers did not translate over to all merchants indicating that these higher priced products are placed at specific merchants. This is no surprise since individual retailers have different target consumers and thus have different target price bands. The high-end products expanded at Best Buy, Fry’s, and Costco. The share of high-
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL price bands. The high-end products expanded at Best Buy, Fry’s, and Costco. The share of highend products decreased at Microsoft Store due to the introduction of lower end mini-PCs for the first time at the retailer. The first mini-PC to arrive was the Kangaroo that debuted at the retailer in November 2015, followed by the Lenovo mini-PC in late November (see also: Microsoft Adds Two HP AIOs and Debuts Kangaroo Mini-PC November 23, 2015 | Microsoft Adds Another Mini-PC November 30, 2015). The expansion of high-priced products at Best Buy and Fry’s is attributable to the increase in gaming desktops placed at the retailers over the last few months. Some of the price band expansion is also the result of increased placements of large screen AIOs from Apple, HP, and Lenovo. The biggest increase in large-screen AIOs is the 27-inch AIO category which grew from 2 placements in 2015 to 10 in 2016. The addition of a product priced over $1,000 at Costco was a strategic change for the retailer, which hadn’t had a product priced that high since 2014. The retailer has begun to carry more AIOs, and as the AIOs get larger the prices also go up, indicating that the high-end price band at Costco is likely to continue expanding throughout 2016. Sam’s Club saw increases in the $600-799 price band, going from 2 placements in 2015, to 7 placements in 2016. Most of these placements were AIOs added within the price band such as the Dell Inspiron 3459-3276WHT that arrived in March (see also: Sam’s Club Updates Dell Desktop Offerings March 28, 2016). Walmart increased its low end offerings as more desktop products became available in the under $250 price band over the past year, such as the Acer Aspire AXC-704G-UW61 (see also: Walmart Introduces First Windows 10 Desktops October 12, 2015).
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2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
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Amongst the changes in brand share and price bands across merchants, form factor distribution remained quite stable throughout the year. Although the share of placements remained stable, there have been subtle shifts under the surface, especially with AIO average prices by display size as reported in a previous gapAnalysis (see also: gapAnalysis: Form Factor Overview February 29, 2016).
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
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Summary Over the past year as AIO sizes increased and gaming PCs gained popularity, there were resulting changes in brand share and price band distribution across retailers. Form factor distribution remained very stable despite these changes, indicating merchant consistency in form factor shelf share. The biggest changes came from decreases in Acer shelf placements and increases in highend products at multiple retailers. As gaming computers continue to gain popularity, it is possible that product distribution could shift even more. Gaming desktops have already found a place on Best Buy’s shelves, and will likely remain there and perhaps increase as new products become available. Microsoft Store is already carrying gaming notebooks and it is highly likely that it could begin to carry gaming desktops within the next year. As predicted at CES 2016, gaming AIOs are likely to enter the market in the second half of this year, and would be the most likely gaming product to enter the Microsoft Store in 2016 (see also: CES 2016: Gaming Desktops Overview January 11, 2016). See Also: Q1 2015 Desktop PCs Retail Overview April 13, 2015
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
gap impact summary: • Industry changes in gaming and AIO size result in shifts of brand presence • Price bands expand across most brands
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL •
Form factor share remains stable despite other changes
Non-weighted distribution by brand in Q1 2016 was more evenly distributed than in previous quarters. HP continued its historic domination of the US retail shelf, however, other brands were distributed differently than previous quarters. Acer’s decrease in shelf share, and “other” brand increased as a result of gaming desktop placements caused by the shift in the brand distribution among the smaller manufacturers. The graph below does not include Fry’s Electronics because the data from Fry’s skews the results and does not provide an accurate representation of the overall US retail market. Although HP continued its dominance in retail placement share, as IDC and Gartner reported in Q1 2016, Dell overtook HP in retail shipments for the first time in over six years (see also: Gartner and IDC: Global PC Market Shows Q1 Declines April 18, 2016). This shift may indicate that although there are more HP desktops on retailers’ shelves, Dell desktops are bought more frequently. Dell’s shipment growth could be due to the increased popularity of Dell’s Alienware gaming computers, but it is unclear in the IDC/Gartner reports whether Alienware is counted as part of Dell or as a separate entity. Another important aspect to note is Acer’s small share, decreasing to just 4% when the company had 9% share during the same period last year. There has been a general decline of Acer products in US retail recently with the company clearing from Best Buy completely. The company’s shelf share has declined due to lack of new products entering the channel. As indicated at the next@acer press event, the company has shifted its focus from general consumer desktops to its gaming products, including Predator line desktops and monitors (see also: Next@Acer Press Desktop Event Recap April 25, 2016).
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL When looking at retail brand presence compared YoY, HP, Lenovo, and Apple all saw placement growth in the retail channels. Lenovo’s growth is due to expansion of products at Office Depot, and the re-entrance to Costco at the end of 2015 as referenced above. The increase in placements for Apple is the result of additional Retina display options of existing Apple AIO products at Fry’s Electronics, adding to rather than replacing previous models. Samsung saw increased placements due to the addition of its 27-inch curved AIO that arrived in retail channels in November 2015, as well as the Samsung Galaxy View portable AIO (see also: Best Buy Updates High-End AIO Assortment November 09, 2015 | Samsung Galaxy View Makes Retail Debut November 16, 2015). The drop in Asus products is due to decreased presence at Best Buy in Q1 and the manufacturer leaving Staples. Asus products have been increasing recently at Best Buy meaning its placements could increase into Q2 2016 (see also: Towers from Asus and iBUYPOWER Added at Best Buy April 25, 2016).
When looking at desktop price band by brand, it is apparent that there has been an increase in higher-priced items across the board. This increase in high-end price bands, especially products priced over $1,000, is due to the addition of larger AIOs such as 27-inch and 34-inch models, whose bigger screen sizes result in higher prices. These high priced items include the HP Envy 34a010 available for $1,799 or the Lenovo Yoga Home 900 available for $1,400. Additional increases in gaming desktop placements further added to high-end price expansion, since the average gaming desktop is priced over $1,000.
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL Interestingly, Lenovo is the only manufacturer that did not increase its product share in the $1,000 and above price band, choosing instead to increase placements in lower price bands, namely the $250 and under and the $600-799 categories. The increase in the low end is due to the investment of Lenovo in mini-PCs, which are now available across multiple retailers. Additionally, Lenovo increased its shelf share at Office Depot, resulting in the increase of $600-799 products, the price band most commonly found at the retailer. As seen in the brand share chart, the strategic expansion of these particular price bands earned Lenovo 15% share of the US retail shelf, an increase from 11% seen the same time last year. Apple increased its high-end price band with the addition of 27-inch AIOs with Retina display that start at $1,499. “Other” brands also increased in the $1,000 and above category as more gaming desktops entered the market such as those from iBUYPOWER, Alienware, CyberPower, and CybertronPC.
This increase in products with higher prices across all manufacturers did not translate over to all merchants indicating that these higher priced products are placed at specific merchants. This is no surprise since individual retailers have different target consumers and thus have different target price bands. The high-end products expanded at Best Buy, Fry’s, and Costco. The share of high-
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL price bands. The high-end products expanded at Best Buy, Fry’s, and Costco. The share of highend products decreased at Microsoft Store due to the introduction of lower end mini-PCs for the first time at the retailer. The first mini-PC to arrive was the Kangaroo that debuted at the retailer in November 2015, followed by the Lenovo mini-PC in late November (see also: Microsoft Adds Two HP AIOs and Debuts Kangaroo Mini-PC November 23, 2015 | Microsoft Adds Another Mini-PC November 30, 2015). The expansion of high-priced products at Best Buy and Fry’s is attributable to the increase in gaming desktops placed at the retailers over the last few months. Some of the price band expansion is also the result of increased placements of large screen AIOs from Apple, HP, and Lenovo. The biggest increase in large-screen AIOs is the 27-inch AIO category which grew from 2 placements in 2015 to 10 in 2016. The addition of a product priced over $1,000 at Costco was a strategic change for the retailer, which hadn’t had a product priced that high since 2014. The retailer has begun to carry more AIOs, and as the AIOs get larger the prices also go up, indicating that the high-end price band at Costco is likely to continue expanding throughout 2016. Sam’s Club saw increases in the $600-799 price band, going from 2 placements in 2015, to 7 placements in 2016. Most of these placements were AIOs added within the price band such as the Dell Inspiron 3459-3276WHT that arrived in March (see also: Sam’s Club Updates Dell Desktop Offerings March 28, 2016). Walmart increased its low end offerings as more desktop products became available in the under $250 price band over the past year, such as the Acer Aspire AXC-704G-UW61 (see also: Walmart Introduces First Windows 10 Desktops October 12, 2015).
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL
Amongst the changes in brand share and price bands across merchants, form factor distribution remained quite stable throughout the year. Although the share of placements remained stable, there have been subtle shifts under the surface, especially with AIO average prices by display size as reported in a previous gapAnalysis (see also: gapAnalysis: Form Factor Overview February 29, 2016).
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
CONFIDENTIAL
Summary Over the past year as AIO sizes increased and gaming PCs gained popularity, there were resulting changes in brand share and price band distribution across retailers. Form factor distribution remained very stable despite these changes, indicating merchant consistency in form factor shelf share. The biggest changes came from decreases in Acer shelf placements and increases in highend products at multiple retailers. As gaming computers continue to gain popularity, it is possible that product distribution could shift even more. Gaming desktops have already found a place on Best Buy’s shelves, and will likely remain there and perhaps increase as new products become available. Microsoft Store is already carrying gaming notebooks and it is highly likely that it could begin to carry gaming desktops within the next year. As predicted at CES 2016, gaming AIOs are likely to enter the market in the second half of this year, and would be the most likely gaming product to enter the Microsoft Store in 2016 (see also: CES 2016: Gaming Desktops Overview January 11, 2016). See Also: Q1 2015 Desktop PCs Retail Overview April 13, 2015
CONFIDENTIAL
2448 Historic Decatur Road fax: (619) 574-6600 Suite 105 voice: (619) 574-1100 gap intelligence email: [email protected] San Diego, California 92106
