Notebook momentum drives European PC growth
European demand for notebook computers showed no signs of abating in the past year and resulted in over 88 million devices shipped in the region but going into 2008, connectivity alliances between PC vendors and telcos will transform the shape of the market.
Growth was driven by the continued notebook momentum in western Europe, which propelled notebook sales growth to 36.4pc year-on-year across the region, as well as continued market expansion in central eastern Europe, and Middle East and Africa at 26.7pc and 18.4pc respectively.
2007 proved to be a strong year for the notebook industry, with increasing vendor push and intensifying competitive and pricing pressure driving renewal of the notebook-installed base in western Europe and accelerating notebook adoption in central Europe.
The transition to mobility was particularly strong in the consumer segment, with EMEA consumer notebook sales expanding by 46pc year-on-year. As a result, notebooks overtook desktops for the first time in the EMEA consumer PC market, with close to 21 million consumer notebooks shipped versus 16.5 million consumer desktops.
"IDC expects 2008 to be another buoyant year for the EMEA PC market. Notebooks will remain a key driver across the region and further market commoditisation will fuel a solid 14.4pc growth, with total PC sales in EMEA expected to cross the 100 million mark," said Karine Paoli, associate vice-president, IDC's EMEA personal computing group.
"This year will mark further milestones in the PC industry," Paoli continued. "Vendor competition is not expected to soften, particularly in the retail channel with the entry of Dell and Lenovo, and Acer's consolidation with Gateway and Packard Bell, while the arrival of lower-cost mobile platforms is likely to add further pressure.
"However, as the market expands and new usage scenarios emerge, 2008 will see the development of increasing user segmentation and branding differentiation, while the convergence, expected to accelerate this year between PC and telco players, will offer new business models and route-to-market opportunities," she added.
In western Europe, renewals, multi-equipment homes and further portable adoption will help maintain strong notebook momentum, with sales forecast to grow by over 20pc in 2008, according to Eszter Morvay, senior research analyst, IDC's EMEA PC group.
However, the sustained appeal of notebooks will continue to inhibit the recovery of the desktop market, which is expected to further contract at -2.6pc in 2008.
"Notebook demand in the consumer and SME segments is expected to remain the key engine of growth in western Europe," Morvay said. "Stimulated by an increasing need for differentiation as the market commoditises, new multi-branding strategies in retail will enable vendors to target groups of customers more effectively and to better balance price points by diversifying their offerings based on usage scenarios.
"Furthermore, the market will continue to see fast technology adoption, allowing vendors, along with design, to differentiate new models."
Adding to healthy consumer trends, the SME market will remain a key opportunity for growth in western Europe, particularly around mobility.
As the notebook-installed base continues to grow, the segment presents increasing vertical opportunities and vendors will need to further tailor their strategies to better address SMEs' needs with dedicated products, support, and services.
2008 will also benefit from the current replacement cycle in the corporate space, which started in 2007 and is due to peak throughout 2008, helping to generate desktop volumes and adding incremental growth in the notebook space. Client virtualisation will remain a major development direction and will drive continued infrastructure investment.
IDC says as the market expands and continued price erosion makes computers affordable to an ever-wider customer base, 2008 will undoubtedly see further commoditisation of the EMEA PC market.
Price will remain a key traffic and volume generator, particularly in retail, with large notebook promotion deals sold at spot prices, and notebook ASPs expected to drop by a further 12pc this year. Weak desktop demand levels and bidding wars for corporate tenders will also continue to push desktop prices down.
The arrival of lower-cost systems on the market is likely to add further pressure but will contribute to the continued expansion of the market from a product- and usage-scenario standpoint.
The parallel development of increasing partnerships between telco operators and PC manufacturers, both looking for new sources of revenue, will also create new opportunities and the convergence of the two industries is expected to accelerate in 2008.
Throughout 2007, the market has seen several initiatives, both government and operator subsidised, to bundle broadband connectivity with laptop sales. With the increasing traction of these programmes, telcos will be looking to work with an increasing number of PC manufacturers, while PC vendors will be looking to telcos as a new route-to-market to reach customers.
Although this model is primarily targeting the consumer and SOHO segments, connectivity will clearly remain crucial in the SME space as well. With the integration of various wired and wireless connectivity options, along with Intel's push of WiMax support in the new Montevina platform, commercial notebooks are becoming all-round communications platforms.
While next-generation 3G antennas are already being integrated as standard, the industry will increasingly join efforts to drive mobility to the next level through embedded solutions.
Market commoditisation and price erosion will continue to constrain revenue growth, expected to reach 3.4pc in euro terms in 2008 across EMEA, mobility will remain a key growth axis over the forecast period. However, this will require vendors to develop stronger branding and up-sell strategies, along with an increased focus on vertical and niche markets, in order to address the opportunities created by an increasing mobile user base and drive continued revenue and profit growth.
By John Kennedy