A lack of consumer excitement over the desktop leads to weaker-than-expected sales.
Dazzled by all the new digital gadgets, holiday shoppers are expected to buy up cameras, plasma TVs, music players and other consumer devices, rather than replace the old PC that many see as good enough, a market researcher said Monday.
Worldwide PC shipments are expected to reach 51.9 million units in the fourth quarter, a 10.1 percent jump from the same period a year ago, Gartner Inc. said. The figures, however, reflect healthy sales in the professional market, while home sales are weaker than expected because of competition from digital entertainment products.
"(Buying entertainment gadgets) is simply more exciting than replacing PCs," Gartner analyst Kiyomi Yamada said. "If you're going from a desktop to a notebook then that's kind of exciting, but other than mobility, we haven't seen many new functions in PCs. In other words, there's no must-have."
Many computer makers, such as Dell Inc. and Hewlett-Packard Co., have seen the trend coming and are offering music players, TVs and cameras, which carry higher profit margins than PCs.
"Everyone recognizes that this is going on, and are trying to play on both sides of the street," Gartner analyst George Shiffler said.
For the whole year, Gartner projects PC shipments to reach 182.7 million units, an 11.4 percent increase over 2003. The forecast, however, is less than Gartner's earlier projection of 13 percent growth, which was revised downward because of less-than-expected shipments in the home market in the third quarter, and the prospect of weaker sales during the holiday season.
Because digital cameras, music players and other devices are used with the PC, the more gadgets sold could lead to an increase in PC upgrades in the near future, Shiffler said.
Long term, however, it's unclear whether digital entertainment devices, such as video recorders like TiVo and plasma TVs, will substitute PCs as they take on more PC-like functions. On the other hand, it's unclear how successful PCs will be at becoming the central store for pictures, video and music.
"The PC has shown itself to be pretty flexible, so I wouldn't rule it out," Shiffler said.
But for now, it's hard to see people paying bills and reading personal email on the family TV, while it's equally difficult to imagine people gathered around the PC to watch their favorite cable program.
"The PC does face certain challenges as an entertainment device, just as entertainment devices face challenges in information processing," Shiffler said.
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