PC shipment slowdown continues; forecasts slashed

Outlook for 2011's PC growth reduced to 3.8 percent from 9.3 percent due to economic upheaval in U.S. and Western Europe and changing consumer priorities, says Gartner.
Written by Liau Yun Qing, Contributor

Worldwide PC unit growth is expected to hit 364 million in 2011 at a reduced pace of 3.8 percent due to sharply downgraded forecasts for Western Europe and the United States from economic upheavals and changing consumer sentiments, new report showed.

Gartner's report on Thursday revealed that the previous growth projections for the PC market were 9.3 percent growth in 2011 and 12.8 percent in 2012. These figures have been revised downward to 3.8 percent this year and 10.9 percent, or 404 million units, for next year. The research firm's PC forecast does not include media tablets, which is forecasted separately.

According to the report, the more pessimistic outlook is primarily due to sharply downgraded forecasts for Western Europe and the U.S. in the second half of this year.

"Western Europe is not only struggling through excess PC inventory, but economic upheaval as well," noted Ranjit Atwal, research director at Gartner. "U.S. consumer PC shipments were much weaker than expected in the second quarter and indications are that back-to-school PC sales are disappointing."

He added that consumer and business spending is expected to "tighten" in response to an increasing pessimistic economic outlook in both regions, although business customers are tightening their belts less than consumers.

The second half of 2012 is expected to buck the downward trend, though, as economies stabilize and new mobile PC form factors enter the market, the report stated.

Changing consumer mindsets
In the long term, while PCs remain important to both consumers and enterprises, such purchases can be "easily delayed" due to the availability of complementary devices that are "seen to be more attractive", Atwal noted.

What is "worrisome" for PC vendors is that Generation Y customers has an altogether different view of client devices than older generations and are not buying PCs as their first, or main, device, he stated. For older consumers, today's PCs are also not a "particularly compelling product", so they will continue to extend the lifespan of existing machines by repairing, rather than replacing, the analyst added.

George Shiffler, research director at Gartner, also pointed out that media tablets have "dramatically changed" the dynamic of the PC market. He cited Hewlett-Packard's decision to rethink its PC strategy and discontinue its WebOS business as evidence of the pressure PC vendors are facing to adapt to the new dynamic or abandon the market.

"Vendors' tried and true business models are failing as traditional PC functionality is extended to other devices and users continue to lengthen PC lifetimes," Shiffler said. "Vendors [appear] to be flailing as they look for quick fixed to their problems. Unfortunately, the resulting chaos is just creating more confusion across the entire PC supply chain."

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