Notebook boom to drive European PC growth

2 Jun 2006

Western European PC shipments will grow by 7.9pc a year over the next five years, driven by a boom in demand for notebook computers while desktop sales will remain modest.

“Stimulated by declining price points, increasing product attractiveness and performance, demand for portable PCs will continue unabated and notebook sales will increase by an average annual growth rate of 15pc over the next five years,” said Eszter Morvay, research analyst at IDC’s EMEA Quarterly PC Research group.

“Directly impacted by the transition to portable form factors as well as increased market saturation, desktop shipments will record a mere 1.2pc growth over the forecast period.”

2005 marked an important transition across the region with increased commoditisation of laptops forcing PC makers to develop increasingly effective business models.

The proliferation of low-priced entry-level systems and declining prices remained a major volume generator, especially in the consumer space, boosting penetration rates across Western Europe. As a result, portable PC sales expanded by a robust 31.1pc while desktop sales also recorded a healthy 7.5pc growth.

Overall, Western European PC shipments reached 47 million units in 2005, representing a solid 16.3pc increase year on year, while total revenue amounted to €42bn, increasing by 4.1pc compared to a year ago.

Overall market growth in 2006-2007 is set to decelerate to below 9pc due to slowing desktop trends. However, notebook momentum will continue fuelling market demand and growth opportunities while vendor competition is not expected to soften.

Notebook sales will remain buoyant with average annual growth reaching close to 18pc in 2006-2007. However, continued price erosion will result in much softer trends in revenue terms. Private purchases will remain the key driver of growth with attractive prices stimulating first-time buyers as well as a growing renewal market.

Commercial notebook sales will also display solid trends as portable adoption continues unabated in small to medium-sized businesses (SMB) along with growing demand in the corporate sector. Increasing integrated wireless solutions will further boost portable adoption across all segments.

Desktop sales will continue to decelerate in the coming years, recording an average annual growth rate of less than 2pc in 2006-2007. Demand will remain constrained in 2006 by a lack of large-scale corporate rollouts and an ongoing transition to mobility in the SMB space.

Traction around new Media Centre and digital home solutions will continue but the delayed launch of Vista may lead to “wait and see” attitudes and affect consumer demand levels in 2006. However, in 2007 the market will start to benefit from the next corporate refresh wave as well as the migration trends to Vista.

Beyond 2008, the market will become increasingly dependent on replacement demand. Nevertheless, the evaluation of new client form factors across both the business and consumer segments will continue to represent major opportunities. A fierce competitive environment and declining profit margins will nevertheless remain key challenges for industry players.

By John Kennedy