IDC cautious about PC growth in the long term

28 Sep 2004

Encouraged by consistent gains in commercial PC demand, tech analyst IDC has raised expectations for 2004 PC shipments to reach 176.5 million, a growth of 14.2pc driven primarily by gains in Europe and the rest of the world. The analyst firm has maintained a conservative outlook for the long term, however, urging PC firms to be cautious in the context of political uncertainty and market maturity for PCs in the US.

Commercial PC shipment growth of 17.2pc in the second quarter was the highest since mid-1999, and the fourth consecutive quarter over 13pc, according to IDC’s Worldwide Quarterly PC Tracker.

Although worldwide consumer growth met expectations in the second quarter, growth is expected to slow from near 20pc in the second half of 2003 to only 9pc in the second half of 2004. Even with the slowdown in consumer activity, commercial growth has led IDC to increase projections for total 2004 shipment growth from a June estimate of 13.5pc to a current projection of 14.2pc.

Despite the increase, second quarter growth accounted for 58pc of the total change to 2004 shipment volumes with only 42pc falling into the second half of the year. In addition, growth estimates for 2005 were lowered 0.2pc to 10.5pc and projections for growth in future years remain in single digits. There are also regional variations in consumer and commercial growth that are important to be aware of.

“The market needs to be careful in interpreting these results,” said Loren Loverde, director of IDC’s Worldwide Quarterly PC Tracker. “Strong growth in Western Europe and rest of the world played a significant role in boosting second quarter results, while growth in the US missed forecasts and slipped into single-digits. Similarly, it’s important to note that we’ve lowered growth expectations for the consumer and portable markets even though projections for overall growth have increased slightly in the short term.”

Loverde said that high growth in recent quarters is partially the result of a depressed market in prior years. As the market recovery matures, year-on-year comparisons will become more difficult, and growth is expected to subside.

“The tempered forecast of the US market is somewhat in contrast to higher growth elsewhere, particularly in Europe,” added Roger Kay, vice president of client computing at IDC. “Overall market maturity in the US and uncertainty in both political and economic spheres has led us to revise our forecast modestly downward.”

Focusing specifically on Europe, IDC said that overall growth should remain strong as the recovery continues to be supported by a strong Euro. Nevertheless, growth will begin to slow as portables growth cools and year-on-year comparisons become more difficult.

By John Kennedy