Gartner cuts PC sales forecasts as tablets take off

Gartner has reduced its estimate for this year's PC sales to 352.4 million units, which represents 14.3% growth compared with last year. As recently as September, the research company had been predicting 17.9% growth. Gartner has also reduced its prediction for next year's growth in shipments from 18.1% to 15.9%, which represents 409m units -- more than a million a day.

Ranjit Atwal, research director at Gartner, said in a statement: "These results reflect marked reductions in expected near-term unit growth based on expectations of weaker consumer demand, due in no small part to growing user interest in media tablets such as the iPad. Over the longer term, media tablets are expected to displace around 10% of PC units by 2014."

Gartner adds:

In the near term, many consumers and businesses will continue to refrain from buying PCs, as they collectively rebuild their finances in the face of slower income growth, weaker employment gains and a cloudy economic outlook. Over the longer-term, users are likely to slow PC replacements and extend PC lifetimes as they turn to other devices as their primary computing platform.

Basically, there's a limit to how much people will spend on technology devices. If they are buying high-priced smartphones and tablets as more convenient ways to consume media, they are less likely to buy new PCs.

In the business market, more companies will use hosted virtual desktops (HVDs) "predominantly by using refurbished PCs and thin clients. These alternative devices will displace new PC units, thereby reducing expected future desk-based shipment growth," says Gartner. However, these "are not expected to earnestly impact mature professional markets until 2012, at the earliest".

The full report, Forecast Alert: Worldwide PC Forecast Downgraded as PC Market Hit by Disruptive Forces, can be purchased on Gartner’s website.

Most IT and Wall Street analyst companies are currently trying to calculate the impact of tablet PCs, as reported this weekend by Barron's in Will Tablets Kill the PC Star? The story quotes an estimate by Craig Berger of FBR Capital Markets that "40 million tablets [will be] sold by Apple next year and 30 million by the rest of the pack. Berger warns that the economics of tablet computing are 'not good for PCs,' with one PC sale lost for every 2.5 tablets sold".

Estimates of tablet sales vary widely, of course, and also depend on which devices you count: tablets are basically large smartphones, but how large a screen qualifies? For example, is an Android device with a 5-inch screen a large smartphone or a small tablet? Either way, my view is that tablet sales will tend to shift revenues from companies that are strong in the PC market, such as HP and Dell, to ones that are strong in mobile phones, including Apple, RIM and Samsung.

There is also some chance that PC companies can sell tablets, or slates, based on PC standards such as Intel Atom chips and Microsoft Windows 7. But historically this has been a relatively small market, and there's very little evidence of it getting much larger.