PC revenues to be flat this year, says Gartner

22 Aug 2005

Worldwide PC unit shipments are on pace to grow 12.7pc in 2005. However, global PC revenue, Gartner says, is flat and is forecast to grow just 0.5pc this year.

Worldwide PC unit shipments are projected to total 206.6 million in 2005, with PC revenue totaling US$202.7bn. In 2006, worldwide PC units are expected to grow 10.5pc, but PC revenue will decline 0.4pc.

Gartner analysts say the disparity in growth rates is attributable to continuing declines in the average selling price (ASP) of PCs.

“The quest for growth is forcing vendors to test the limits of PC price elasticity,” said George Shiffler, principal analyst for Gartner’s Client Platforms Research. “The whole dynamic is compounded by the fact that buyers have increasingly come to expect sharp price declines.”

“The drop in mobile PC ASP has been particularly remarkable,” said Mikako Kitagawa, principal analyst for Gartner’s Client Platforms Research. “PC vendors have succeeded in increasing the unit share of higher margin mobile PCs, but this has resulted in a significant sacrifice of desk-based revenue as vendors struggle to maintain the value proposition of desktops at the low end of the market.”

ASPs are likely to remain under strong downward pressure. “Mounting cost pressures will eventually slow on-going ASP declines, especially if PC component prices firm,” Shiffler said. “However, as recent earnings announcements illustrate, vendors are facing strong competitive pressures. These pressures are only likely to intensify if unit growth slows. Vendors may have little choice other than to cut prices or offer more lower-cost, de-featured machines.”

PC growth will continue to be buoyed by strong mobile PC shipments as buyers are increasingly attracted to mobile computing because of lower prices and enhanced wireless experiences. Worldwide mobile PC units are forecast to grow 31pc in 2005.

By John Kennedy