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Bright outlook

by Stuart Wilson, Monday 21 April 2008

The next four years are looking good for the PC sector, according to a new report from Global Industry Analysts (GIA) – well in terms of unit sales at least. While overall shipments are expected to climb on a global basis, sustainable margin and long-term stability will be harder to find in an industry sector that the GIA team describe as ‘highly volatile’.

The GIA report claims that global PC shipments will mainly be driven by a boom in sales of notebook computers, which will help to offset a general slowdown in the growth rate of desktop PCs in the developed markets. The strong anticipated demand expected fro emerging markets such as Eastern Europe, Latin America and Asia will also contribute to solid overall growth during the next four years.

“The PC industry is highly volatile and is characterized by strong competition, pricing pressures, changing customer preferences, rapid technological developments, competition from well established high-tech and electronics companies and continuous disputes over intellectual property and antitrust issues,” stated GIA.

“With a large number of competitors, the market is characterized by price pressures from competitors and price sensitiveness on part of the customers. Robust growth in the desktop and notebooks segments continues to fuel the global PC market. Demand for notebooks has also increased mainly due to lower pricing, wireless capabilities, and the increasing need for mobility,” it added.

“Frequent product launches, changing industry standards, and high level of price competition in the PC market has resulted in short product life cycles and frequent reduction in selling prices. Despite high growth rates in recent years, the market has not stabilized and is sensitive to decline in sales or sales growth. Manufacturers constantly face the risk of excessive inventories, due to the unpredictability of market conditions,” GIA explained.

Europe was the largest PC market in 2007 accounting for 28.5% on PC shipments while Asia-Pacific is expected to show the fastest growth during the next four years. The US market, which saw PC shipments of 66.66 million units in 2007, is expected to top the 82.8 million mark for full year 2012.

Desktop PCs accounted for 55.1% of shipments in 2007 but the notebook form factor is rising fast with a compound annual growth rate in excess of 18% predicted through to 2010.

“Easing prices, shrinking performance gap in relation to desktops, increased access through retail channels and enhancing wireless connectivity continue to drive notebook PC sales,” stated GIA. “PC server shipments are projected to exceed 17.5 million units by 2012, as against an estimated 9.6 million units in 2007.”

HP reclaimed PC top spot in 2007 thanks to its strong performance in both the consumer and business PC segments with Dell in second place. After its purchase of Gateway, Acer has moved into third place, overtaking Lenovo in 2007. New sales models are channel engagement strategies are having a positive impact on Dell and Acer according to the GIA report.

Companies such as Dell and Acer have employed new sales distribution channels. Dell recently commenced selling through giant retail chains. Drastic retail expansion propelled Dell’s volume sales in consumer segment while channel partnership initiatives boosted commercial segment,” GIA concluded.

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