Recovery In Sight For PC Market

Stronger consumer PC shipments -- especially netbooks -- will revive the battered hardware sector, Gartner says.
The PC market, which has been hit hard by the economic recession, will resume growth in the fourth quarter of this year, a market research firm says.

While not quite ready to say the worst is over, Gartner said it expects a "healthy market recovery" next year, when PC shipments are expected to rise by 10.3% over this year. But until then, PC sales will be weak.

Shipments this year are expected to fall by 6% from 2008, Gartner said. Contributing to the drop will be a roughly 10% year-over-year decrease in the second and third quarters.

Nevertheless, this year's projected drop is less than previously expected. In mid-May, Gartner had predicted a 6.6% decline for the year, which was considerably less than the 9.2% decrease forecast in March.

PC shipments were better than expected because of much stronger consumer PC shipments than anticipated, Gartner said. However, much of the growth was due to vendors and the channel restocking inventories rather than an upsurge in demand. Business PC shipments continue to struggle.

Netbook shipments have cushioned the overall market decline, and manufacturers are on track to ship 21 million units of the mini-laptops this year and 30 million next year, Gartner said. However, mini-notebook units posted their first quarter-to-quarter decline in the first quarter of 2009, an indication that the market segment may be yielding to competition. Netbooks made their debut in 2007.

"While this was in part the result of the general contraction in PC shipments to the EMEA (Europe, Middle East and Africa) region, it also reflects increasing competition between mini-notebooks and low-end mainstream mobile PCs as the former evolve toward larger screen sizes, and the latter continue to drop in price," Gartner research director George Shiffler said in a statement released Thursday. "In effect, mini-notebooks are becoming just another value-based mobile-PC offering."

Mobile PC shipments will increase by 4.1% this year to 149 million units, but revenues will decrease 12.8% as average selling prices continue to drop at an unprecedented rate, Gartner said. The falling ASPs is due to a market shift to lower-priced laptops, driven in part by the inexpensive netbooks, but also by performance-for-prices improvements in low-end mainstream laptops.

Desktop PC shipments are forecast to drop 15.7% this year to 125 million units, while spending on the systems is expected to fall 26.6% from last year, Gartner said.

"Both mobile-PC and desk-based PC units are being held back by users extending PC lifetimes and delaying replacements in response to the ongoing economic slowdown," Shiffler said. "The good news for the industry is that delayed replacements won't be lost replacements. Our research indicates replacements should grow strongly in 2010 and 2011, helping to power the market's recovery."

The release of Windows 7 in October, recently announced by Microsoft, is likely to have only a "very modest" impact on the PC market, Gartner said.

"Unless Microsoft mounts a major marketing campaign in support of Windows 7, we think consumers will simply adopt the new operating system (OS) as they would normally buy new PCs and/or replace old ones," Shiffler said. "As for professional users, we still expect them to put off adopting the new OS for at least a year until they have fully tested their applications against it."

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