Shipments of personal computers totaled 92.7 million worldwide in the fourth quarter of 2011, down 0.2% from the same quarter of 2010, according to research firm IDC.

Hewlett-Packard (HPQ) continued to lead sales, accounting for 16.3% of worldwide PC shipments in Q4, followed by Lenovo, Dell (DELL), Acer Group and Asus, in that order. However, the giant computer maker took a major hit during the quarter.

The weakness in the PC market was a result of continuously low consumer demand, which led to low holiday orders. In addition to economic challenges, vendors had to face competition from other consumer electronics -- including tablets, e-readers and mobile phones -- and shortages of hard disk drives (HDDs).

However, the impact of supply-chain constraints brought on by the flooding in Thailand was limited, as most Tier 1 PC vendors had access to sufficient HDD supplies. Smaller PC vendors and retail channels experienced more severe shortages, though, and this is expected to continue in the first quarter of 2012.

 

While HP retained its top position, its market share dropped over 3% in 4Q 2011 from 19.4% in 4Q 2010. For the full year 2011, HP's market share was down over 80 basis points at 17.7%. Lenovo, the second largest player in the PC market, closed the gap in terms of PC shipments and was only 2.3 percentage points behind the leader during the fourth quarter. The difference between HP's and Lenovo's market share during the same period last year was over 9 percentage points.

HP's poor showing is largely attributed to the PC division spin-off announcement by ex-CEO, Leo Apotheker, which significantly affected buyers' confidence in the firm's offerings. Although HP stepped back from the suggestion of spinning off its PC division, under new CEO Meg Whitman, the company's PC shipments fell by 16% year-over-year, with some of the market share picked up by aggressive competitors, in particular Lenovo.

However, with a new CEO and a recommitted focus on stabilizing the business and product development, the company may be able to recover its momentum in the coming quarters.

 

Despite a multitude of ongoing concerns, including the recovery of HDD supply, the launch of Windows 8 and the evolution of PCs into mobile devices, the outlook for the PC market in 2012 and beyond seems to be surprisingly good.

We expect continued strong demand in emerging markets in 2012 and Europe could surprise. In the U.S., new products and technologies could lead to a refresh cycle starting in 3Q 2012 and beyond. This could drive the PC market to a 5% increase in shipments in 2012, followed by growth in the high teens during the first half of 2013 and annual growth of over 11%.

We estimate the PCs (notebooks and desktops combined) make up nearly 13% of our $42 Trefis price estimate for HP. See our full analysis on HP.