PC sales weather economic storm

Worldwide PC shipments appear to be weathering the global economic downturn, with international research firms Gartner and IDC saying they expect around 300 million units to be shipped this year.

Gartner's latest quarterly overview, released yesterday, says it expects worldwide PC shipments to reach 297 million units this year, a rise of 12.5% from 2007. This is above the 10.9% increase it projected in March.

IDC expects worldwide PC shipments to grow by 15.2% in 2008, to hit 310 million units shipped. The value of these shipments is to grow by 9.6%, to more than $286 billion.

Both firms say the resilience in the PC market is due to the strong demand in emerging markets, which are overtaking the more established markets, and the advent of cheap PCs that have lowered prices, but are keeping demand buoyant in emerging markets. The companies both revised their forecasts upwards from the previous quarter.

"Mobile PC shipments exceeded our expectations in the first quarter of 2008," says George Shiffler, research director at Gartner. "Mobile PCs continue to have strong momentum and the global economic environment is proving to be less punishing than we expected. Even so, it's a bit premature to say PC shipments won't be impacted by a weaker global economy, especially if oil and food prices continue to soar."

Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker, says: "Even as the PC market grapples with slower growth in more developed markets, adoption cycles for new operating systems, processors and other components, and convergence of media and devices, the success of portable PCs continues to drive the market. Despite recent economic pressure, the consistent gains fuelled by portable adoption, falling prices, and new users - particularly in emerging regions - will continue to drive growth during the forecast."

IDC says key factors driving the continuing strength of portable shipments are a greater emphasis on replacing desktops with portables, and the emergence of ultra-low-cost notebook PCs. These include the Eee PC from Asus, systems built on the Classmate PC platform by Intel, and the XO from the One Laptop Per Child initiative.

The research firm says these systems had been excluded due to use of non-traditional PC designs, including the use of embedded or custom operating systems, reduced processing power and storage, and questions about actual production volumes versus declared targets. However, the latest versions of these systems are now more robust, meeting IDC's criteria to be considered PCs, and actual shipment volumes are rising.

Gartner agrees with the above assessment. Shiffler says Asus's Eee PC is attracting lots of attention in both mature and emerging markets by addressing price points once thought impossible for mobile PCs.

"Several vendors are set to introduce competing mini-notebooks in the second half of 2008. While we are still evaluating the prospects for this new class of mobile PCs, we think mini-notebooks could add momentum to mobile PC growth if they are able to move beyond being mere novelties and establish a broad and distinct market for themselves. Overall, mobile PCs continue to exhibit incredible momentum, especially in emerging markets, which show few signs of significantly waning anytime soon," Shiffler says.

IDC says that following years of strong growth, Asia/Pacific excluding Japan surpassed the US as the region with the largest PC market in total annual shipments at the end of 2007.

At the same time, 'rest of world' - composed of Latin America, Central and Eastern Europe, Middle East and Africa, and Canada - is not far behind. This sector led other regions on a quarterly basis in Q4 2007, and is projected to move from third to second rank on an annual basis in 2008.

It says the US - holding the top rank before 2007 - continues to grow in mid single-digit rates, but has seen growth well behind the better than 20% increases in emerging regions. As growth in emerging regions continues to outpace gains in more developed markets, they are expected to expand their lead.

Both Gartner and IDC say most of the PC shipment growth, especially in the mature markets, will not come from the corporate refresh as they had previously expected, but from the growth in the consumer market.