Personal Computing Sales Through Distribution Return to Growth, Driven by AI PCs

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Distributor revenue remained flat year over year at $19.5 billion in the second quarter of 2024 (2Q24), according to the International Data Corporation (IDC) North America Distribution Tracker (NADT). As expected, Network Infrastructure sales saw a double-digit decline from record highs in 2023 after clearing backlogs from previous years. Fortunately, this was offset by close to 10% year-over-year growth in both Personal Computing and Software sales.

"Market transitions to AI centric processes will place less emphasis on network infrastructure build out and more on developing endpoint, software, and storage cornerstones with associated growth also expected in support frameworks and services," said Ruth Flynn, research vice president, Data & Analytics at IDC.

The Personal Computing product group moved back into the number one spot for sales at $3.9 billion in 2Q24 with healthy year-over-year growth of 9.9%. AI PCs generated 17.8% of second quarter PC revenues and grew 33% compared to 1Q24. Apple and Microsoft have experienced successful adoption of AI PCs with their revenue mixes at 75% and 32% respectively. But Lenovo and HP still held the first and second spots for total PC sales even with lower AI PC product mixes for the quarter. AI PCs featuring Neural Processing Unit (NPU) technologies are expected to continue ramping up over the coming quarters.

In the Software product group, most of the largest categories experienced growth with Software-Defined Storage Controller Software growing 31% year over year, driven by AI support and hyperconverged infrastructure products. Market leader Nutanix saw 45% year-over-year growth in this category, followed by NetApp with 24%. Network Security Software saw 30% year-over-year growth and 54% of that growth was driven by Palo Alto Networks products in cloud access point protection. Growth in these and other markets drove the software segment to $3.9 billion in sales and a 9.6% year-over-year gain.

As expected, increased demand for processing-centric workloads to accommodate AI platforms also stimulated growth in Server and Storage products. Enterprise Infrastructure growth of 3.7% year over year was driven by SSDs, Servers, and Storage Systems leveraging both flash and HDD solutions. This dynamic should continue as infrastructure continues to transition to AI heavy workloads.