The King Is Dead: HP Loses the PC Crown to Lenovo

It's that time of year again. With June now in the rearview mirror, market researchers Gartner and IDC have now released their respective estimates on PC unit shipments in the second quarter, which will subsequently be followed by their digits on the smartphone and tablet markets.

The two companies may use different methodologies and have slightly different figures, but they agree on one thing: Hewlett-Packard (NYSE: HPQ  ) is no longer the top PC vendor in the world by unit volumes. That title has now been transferred to Chinese OEM Lenovo. All 5 of the top vendors declined; Lenovo just declined the least.

Dell (NASDAQ: DELL  ) remains the No. 3 player, but still lags its domestic rival by a fair amount. IDC says Dell's enterprise PC segment performed well, thanks in part to a transition within the enterprise from Windows XP to Windows 7. That's a shift that HP is looking forward to as well.

Vendor

Q2 2013 Shipments

Q2 2013 Market Share

Growth (YOY)

Lenovo	12.6 million	16.7%	(1.4%)
HP	12.4 million	16.4%	(7.7%)
Dell	9.2 million	12.2%	(4.2%)
Acer	6.2 million	8.2%	(32.6%)
ASUS	4.6 million	6.1%	(21.1%)
Total Market	75.6 million	100%	(11.4%)

Source: IDC. YOY = year over year.

Acer and ASUS got hit particularly hard, with year-over-year drops well into the double digits. Both OEMs have historically enjoyed strong positions in the low end, which is being eaten alive by tablets. Their high-end Ultrabooks aren't picking up the slack.

The overall market remains soft, with worldwide shipments falling 11.4% to 75.6 million, according to IDC. That's a sequential improvement from the 14% drop that the market saw in the first quarter. IDC was quick to blame Microsoft (NASDAQ: MSFT  ) Windows 8 for the weakness in Q1, saying it was "clear" that the new platform "slowed the market." IDC still thinks that the market is "struggling with the transition," but a wider range of Windows 8 models in the U.S. definitely helped this time around as OEMs test different form factors.

Gartner, on the other hand, disagrees. The researcher thinks blaming Windows 8 is "unfounded," since it doesn't properly explain the PC's sustained decline, nor does it explain Apple's performance.

This actually isn't the first time that HP has lost the crown to Lenovo. In Q3 2012, Gartner said Lenovo had come out on top, but IDC still pegged HP as the No. 1 vendor, as the two researchers had slightly different estimates. This time, there's now consensus that HP is no longer the PC king.

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Facebook Wants to Become Zynga

Considering Zynga's (NASDAQ: ZNGA  ) expeditious fall from grace, it's hard to imagine any company looking on enviously -- especially one that has a unique insight to Zynga's business: Facebook (NASDAQ: FB  ) .

For years, Facebook and Zynga have been two peas in a social pod. Last quarter, 76% of Zynga's bookings were generated through Facebook. Last fiscal year, Zynga comprised 9% of Facebook's total revenue. The social network noted that Zynga's contribution to its payments business continues to fall, and Zynga wan't mentioned in the most recent 10-Q as a 10% customer.

As part of Zynga's turnaround efforts -- before yesterday's announcement that Don Mattrick would be leaving Microsoft to become Zynga CEO -- Zynga had begun to explore game publishing as a way to diversify away from casual gaming toward the "mid-core" segment. The company tapped developer Phosphor Games to release Horn last year, which earned strong reviews and climbed the charts.

TechCrunch is reporting that Facebook may be looking to also enter the game publishing business now. The company is supposedly partnering with smaller independent developers, cutting distribution deals with ads in exchange for a percentage of sales. Facebook is more concerned with distribution and isn't influencing the content of the games, which other publishers tend to do.

Facebook's gaming platform, which drives the vast majority of its payments revenue, was once soaring but has cooled over the past couple of years. Instead, users are shifting to mobile gaming platforms where Facebook doesn't get a cut.

Source: SEC filings.

Some of the growth has been a function of Facebook's growing user base. Isolating average revenue per user within the payments segment, the payments business has regressed further in this respect with payments ARPU actually lower than it was in late 2011.

Source: SEC filings and author's calculations.

The North American market is where Facebook enjoys the highest payments ARPU, which is more than three times as high as in Europe. Facebook doesn't disclose these figures specifically, so some manual calculations are required.

Geographical Segment

Payments ARPU (MRQ)

US & Canada	$0.65
Europe	$0.21
Asia	$0.07
Rest of World	$0.03
Worldwide	$0.20

Source: SEC filings and author's calculations. MRQ = most recent quarter.

With that in mind, Facebook is likely going after domestic game makers with its publishing forays. With the payments business beginning to slow, the social network is hoping some direct intervention can reinvigorate gamer interest.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.