IDC reins in PC sales forecast

Public sector shortfall

Research company IDC has poured cold water on what was expected to be one of the bright spots in IT spending this year: sales of new computers.

The company reined in its prediction for 2003 shipment growth in the personal computer market to 6.9 percent, down from its previous estimate of 8.3 percent growth over 2002. Slower-than-expected spending in government and education markets is to blame for the weaker outlook, IDC said.

IDC produced other negative news for the sector, saying that shipment value is expected to decline by 1.8 percent in 2003, after falling by 9.8 percent in 2002. This means that although more computers will be sold this year compared to last, revenues derived from sales on a per-unit basis will be noticeably lower.

"In many ways the PC market is performing as expected," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "We have moderate consumer growth, incremental technology improvements, a cautious business sector and persistent uncertainty over the economy, Iraq and North Korea."

"What's new is that public sector spending on PCs is slowing," Loverde continued. "The decline in government and education spending is not unexpected, but it is accelerating, and the impact is showing on PC demand."

The report did contain some positive news, with IDC's director of client computing, Roger Kay, noting that new form factors, such as media PCs and tablets, have added some "zest" to the market. However, on the back of this upbeat note, Kay turned negative, saying that "volumes of these systems still lag their buzz, and technology refresh will not be sufficient to drive significant shipments until the second half of the year."

Eventually, these newer PCs will bring in more substantial revenues, and IDC predicted a big 10.6 percent jump in overall PC sales in 2004 on a global basis. In that year, the company expects 161.1 million units to be sold worldwide.

On a regional basis, IDC said that consumer spending on PCs remains strong in the US, with growth of 8.4 percent in 2002 and 11.3 percent expected in 2003, equating to 16.8 million and 18.8 million units respectively. Business spending in America is improving "incrementally", however and public spending "appears newly vulnerable to declining budgets."

Meanwhile, IDC noted that slow demand in Western Europe was one of the surprises in the fourth quarter of 2002. "Although consumer growth remained positive, leading the market, business and public sector demand missed expectations. Commercial investments continue to be postponed in light of weak economic conditions and political uncertainty," the firm said.

In its update, the company said that worldwide PC shipments reached 38.4 million units in the fourth quarter of 2002, equating to about USD46.9 billion and up 3.7 percent year-on-year. The company said that although growth was slightly slower than in the third quarter, the gradual recovery in the sector was continuing. For the year, shipments approached 136.2 million, up 1.4 percent over 2001. © ENN

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