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3/25/2008
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Slowing Global Economy Threatens PC Shipments

Gartner's concerns include a deepening U.S. recession, a possible slowdown in China's economy following the Beijing Olympics, and the elevated price of oil.

Worldwide PC shipments are forecast to reach 293 million units this year, a 10.9% jump from 2007, a market research firm said Tuesday. But economic problems could emerge that drive growth down into the single digits.

By and large, the PC market is fundamentally in good shape, Gartner said. Mobile PCs are showing strong sales momentum, emerging markets are showing robust growth, and the pace of desktop PC replacements is starting to quicken.

"However, a deepening U.S. recession, the rising possibility of a sharp slowdown in China's economy following the Beijing Olympics, and the elevated price of oil mean global PC shipments face increasing economic headwinds," Gartner research director George Shiffler said in a statement.

Notebook sales remain a key growth driver in the PC market, Gartner said. Technology and design improvements have helped foster the popularity of mobile PCs by lowering prices and significantly improving their value relative to desktops.

Gartner expects demand for mobile PCs to increase as so-called "affordable" notebooks, which will have price points once thought impossible for mobile computers, become more widely available.

Another key driver behind PC shipments this year is emerging markets, where shipments increased by 22% in the fourth quarter of 2007, compared to the same period a year ago. Emerging markets accounted for 60% of worldwide PC unit growth in the quarter.

Strong economic growth in those markets is fueling PC sales, Shiffler said. "Rapid economic growth is not only stimulating PC demand among business, governments and educational institutions, but also generating new demand among the ever-growing numbers of increasingly affluent consumers."

Finally, the next replacement cycle for desktop PCs is expected to begin late this year and run through early 2010. While the sales boost is expected to be "substantially more modest" than the previous cycle from 2004 to 2005, it's still expected to be a key driver behind the increase in shipments expected this year, Gartner said.

While all the above factors bode well for PC vendors, actual shipment growth will depend on the interplay between those drivers and the global economy. "Slowing GDP (gross domestic product) growth can and does affect PC shipments through its impact on consumer incomes and business profits," Shiffler said.

In January, Microsoft said it believes PC shipments in its fiscal 2008, which ends June 30, would increase by 11% to 13%, a 1% increase from what the company predicted three months before. Microsoft expected PC shipment growth to be strongest in the consumer market, and sales in emerging markets like Asia to outpace those in mature markets like North America.

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