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Gartner Lowers PC Sales Forecast

Aug 31, 2010 (10:08 AM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=227200063


Analyst firm Gartner has lowered its global forecast for PC market growth in the second half of the year, due to the uncertainty in the U.S. and European economies. PC shipments are projected to increase by 15.3% year over year in the second half, about 2% less than Gartner's previous forecast. For the full year, Garner estimates shipments will reach 367.8 million units, a 19.2% increase from 2009.'

"There is no doubt that consumer, if not business PC, demand has slowed relative to expectations in mature markets," Gartner research director Ranjit Atwal said in a statement released Tuesday. "Recent dramatic shifts in the PC supply chain were in no small part a reaction to fears of a sharp slowdown in mature-market demand. However, suppliers' risk-aversion is as much a factor in these shifts as any actual downshift in demand."

Computer makers' caution is buoyed by the slow pace of economic recovery in the U.S., particularly in the job market, and spending reductions by European governments to lower debt, Gartner said. Consumer spending was the engine behind PC market growth last year, and manufacturers fear the weakness in the economy could cause people to cutback. However, Gartner said computer makers might be being too cautious, given the importance of the PC in people's lives. "Consumer demand is likely to remain strong even if the economic recovery stalls because consumers now view the PC as a relative necessity rather than a luxury and will continue to spend on PCs, even at the expense of other consumer electronic devices," Atwal said.

While businesses held back last year during the economic recession, they are spending on PCs this year, because they can no longer wait to replace aging PCs, which are at an all-time high in companies. Gartner has predicted that business PC shipments will rise by 13.1% this year from 2009.

"Businesses that delay replacing much longer risk alienating employees, burdening themselves with more service requests and support costs, and ultimately facing higher migration costs when they eventually migrate to Windows 7," Atwal said. "The bottom line is that businesses need to refresh their PCs sooner rather than later. Thus, the full bloom of the long-awaited professional PC refresh can't be more than a few quarters ahead."




Meanwhile, the market impact of netbooks is waning. Shipments of the inexpensive mini-laptops that accounted for nearly 20% of the mobile PC market during the recession fell to less than 18% of the market in the second quarter, Gartner said. By late 2014, netbooks are expected to account for about 10% of the market. That's good news for manufacturers, since the cheap systems' popularity drove down average selling prices for the industry and narrowed profit margins.

"We still think the mini-notebook has a place in the mobile PC market, but not as a substitute for a standard mobile PC," Gartner analyst Raphael Vasquez said. "Indeed, the recent decline in mini-notebooks' share of the mobile PC market reflects a general realization among buyers that mini-notebooks are less-than-perfect substitutes for standard low-end laptops."

Rather than buy a netbook, people are turning to low-end standard laptops, which have prices that are close enough to make them a better option as an only PC. Gartner says netbooks are becoming a niche product as a second, more portable PC that someone may carry for checking email or web browsing. Within that niche, netbooks are expected to face growing competition from the emerging category of tablet-style computers, such as Apple's iPad. Major computer makers, such as Dell and Hewlett-Packard, are preparing to release their own tablets.

"The iPad hasn't had much of an impact on mini-notebook units so far, if only because it is generally priced higher than most mini-notebooks," Gartner researcher George Shiffler said. "However, we anticipate lower-priced iPad imitations will begin to take larger bites out of mini-notebook units as they are released next year." FURTHER READING:

Gartner Predicts 13% Growth In Business PC Sales

PC Sales Grow, Prices Decline