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Computer Buyers Curtail Purchases After Pandemic Splurge

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Superintendent Frank Scarafile, who runs the Little Ferry, N.J., school district, has some bad news for PC and chip makers: He is slashing spending for new devices.

After purchasing hundreds of new Chromebooks for students during the first two years of the pandemic so kindergartners to teens could participate in remote learning, he said the district is well-stocked.

“We’re where we need to be,” Mr. Scarafile said. “This year and next year there will be a lull.”

Across the U.S. and beyond, companies, governments and households that bulked up on computers during the pandemic are drastically scaling back. That trend has driven a worldwide slump in demand for PCs and the chips that power them. The lull in purchasing has worsened throughout the year amid high inflation, rising labor costs and recession fears.

In the latest quarter, “what we saw was companies putting a pause on spending, and consumers doing the same thing,”

Sam Burd,

president of

Dell Technologies Inc.’s


DELL 3.61%

client solutions group, said in an interview.

PC and chip manufacturers have taken a hit as schools, companies and consumers hold off on upgrading machines amid inflation and recession fears.



Photo:

ANDREW KELLY/REUTERS

PC and chip makers have said the market slump hit their results, often harder than expected.

HP Inc.


HPQ 5.39%

reported that its sales declined last quarter shortly after Dell Technologies posted lower profit and weaker-than-expected revenue growth.

Intel Corp.


INTC 4.30%

and

Advanced Micro Devices Inc.


AMD 1.88%

have posted gloomy results or issued profit warnings as a result.

Corporate PC buyers remained a bright spot early this year as they tried to facilitate hybrid work, even after many households pared back spending. But in recent months such buyers have also scaled back.

Marilyn Wilson Lund,

founding partner of real-estate consulting firm WAV Group Inc., said she doesn’t plan on getting new computers soon for her small team in San Luis Obispo, Calif. In the past, she would buy about eight to 10 new devices every year to replace older models. “Unless it’s dropped on the ground and it’s cracked, I’m not doing it,” she said.

Increased labor costs, taxes and travel expenses have made Ms. Wilson Lund leery about spending on hardware upgrades. “You’re trying to do more with less,” she said, adding that many of her brokerage clients have expressed the same sentiment. “People are just not knowing what’s coming around the corner.”

Gartner Inc.


IT 0.45%

says the recent downturn in PC shipments is the worst in more than two decades, and International Data Corp. also shows a steep drop in numbers.

Global shipments of desktop and laptop computers fell in the third quarter by a record 18% from a year earlier to 69.4 million units, according to a report released this week by market-research firm Canalys.com Inc. Notebook shipments were particularly hard hit, the technology-analysis firm said.

The various data providers use slightly different methodologies to determine device shipments.

Even with the sharp downturn, some companies are betting on a rebound in the computer market.



Photo:

Michael Reynolds/EPA/Shutterstock

It isn’t just PC buying that has slumped sharply. Videogaming enjoyed supercharged growth when pandemic lockdowns hit, but with people returning to more regular routines, appetite for gaming computer cards and consoles has lessened.

Nvidia Corp.

, which sells graphics cards often used in high-end gaming laptops, in late August posted lackluster results amid a 33% drop in gaming revenue.

Overall U.S. consumer spending across videogame hardware, content and accessories fell 13% in the second quarter to $12.35 billion from a year earlier, according to NPD Group Inc. and Sensor Tower Inc. For all of 2022, the market-research firms expect sales to decline 8.7% to $55.5 billion, which would mark the first annual decline since 2016.

Dean Machikas, a 34-year-old delivery driver and avid PC gamer in Lancaster, Pa., wants a new, $1,600 graphics card to upgrade his PC, but said he discussed the matter with his partner and they agreed that investing in home repairs is more important. “We’re probably going to have to put a new roof on the house next year and spending money on a new graphics card is probably not a good idea,” he said.

SHARE YOUR THOUGHTS

Have you bought a new computer recently? Why or why not? Join the conversation below.

Even with the sharp downturn, companies are betting on a rebound.

Yusuf Mehdi,

corporate vice president for devices at

Microsoft Corp.

, said the pandemic reinforced the importance of the PC by enabling people to work effectively from home, stay connected and be entertained.

Earlier this week, the software giant updated its line of Surface devices with new versions of its Surface Pro tablet and Surface Laptop, in addition to unveiling a new version of the company’s all-in-one Studio PC with a $4,500 starting price.

Write to Sarah E. Needleman at [email protected]

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