Katy Huberty: The Chromebook backlog plays to Apple's strength

HP's channel inventory rose 480% over the past eight weeks due to a combination of easing supply constraints and moderating demand.

From a note to Morgan Stanley clients that landed on my desktop Friday:

PC channel inventory is now 105% above pre-COVID levels ex-Samsung (Exhibit 1), and 73% of the channel fill over the past 8 weeks has come from HPQ (Exhibit 2). While the rate of channel fill has flattened for Lenovo, Acer & Asus over recent weeks and Samsung's inventory levels have fluctuated, HPQ's channel inventory continues to climb and is up 480%+ over the past 8 weeks (Exhibit 3).

We believe this is largely attributed to Chromebooks, which make up 21% of HPQ's total PC unit sales. During CDW's 2Q earnings call, management noted that they are seeing Chromebook backlog come down due to a combination of easing supply constraints and moderating demand. In addition, Nikkei Asia reports that there has been a "sudden correction" in Chromebook component orders since July, and PC companies have scaled back Chromebook orders to suppliers by 20%+, which translates to 10M fewer shipments this year...

On a TTM basis, Apple was the largest share gainer, gaining 100 bps Y/Y, however, its unit share of 8% still trails behind Dell at 15.4%, HPQ at 21.9%, and Lenovo at 23.7%. This reflects both the strength of Apple's M1 lineup and commentary from management that Apple still has room to penetrate the PC market. On a TTM basis, Dell was the largest share loser (-140 bps Y/Y), followed by HPQ (-130 bps Y/Y).

Cue Exhibits 1-3:

apple chromebook backlog

apple chromebook backlog

apple chromebook backlog

Click to enlarge. 

My take: For serious work, you eventually want a computer with plenty of on-board storage and an industrial-strength operating system.

6 Comments

  1. Fred Stein said:
    Are iPads included in the statistics?

    1
    August 13, 2021
  2. Families with college & high school kids are mulling another laptop purchase right now. That’s quite a few laptops. They’ll buy what they trust will last & can afford. Most of all they’ll make sure their child has something that works reliably. Some college kids get Mom & Dad’s older laptop, which will then be replaced. New laptop availability was limited at the base exchange recently. Tablets with keyboards are ubiquitous these days, Fred. Home health care workers all carry them.

    0
    August 13, 2021
  3. David Emery said:
    Interesting to consider that Chromebooks tend to be lower end devices, using lower end components. It’s those that seem to be in tight supply these days.

    1
    August 13, 2021
  4. Fred Stein said:
    Apple will continue to gain share in both PC and tablet categories for a long time.

    When Apple and TSMC bring out new storage technologies, the growth will accelerate.

    1
    August 13, 2021
  5. Kirk DeBernardi said:
    Apple’s build sensibility, product and software design inherently sustain long term value.

    It’s a core precept.

    People interpret that as caring and will ultimately perceive it as the true value that it is.

    It never hurts to be the distinguished one in the pile.

    😉

    1
    August 13, 2021
  6. Rodney Avilla said:
    “with plenty of on-board storage”

    you mean with the ‘overpriced’ storage apple uses?

    0
    August 13, 2021

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