Notebook brand vendors are facing high channel inventories for the first quarter of 2016 as they placed increased orders to restock in the fourth quarter of 2015, but demand from the year-end holidays was not strong enough to digest volumes to a safe level.

With competition remaining fierce, many brand vendors are expected to see decreasing shipments in the first quarter and Acer may even see shipments below three million units in the quarter. However, Acer declined to comment.

Lenovo has been competing with price cuts in the notebook market since the beginning of the second half of 2015, especially in Europe, where the vendor is offering buy-two-get-one-free promotions to attract demand. The strategy has forced some competitors to follow suit.

With high inventories, most brand vendors have dramatically reduced their notebook orders for January and expect shipments in the first half to remain weak. As for shipments in the first quarter, most expect volumes to drop by double-digit percentages.

Acer has been tightly managing its inventory to avoid losses, but is still being seriously impacted by competitors using its old strategy of dumping inventory to channels to create strong numbers.