PC shipment growth grinding to a halt

Research group IDC has cut its forecast for worldwide PC shipment growth in 2002 to a scant 1.1 per cent, citing slower-than-expected sales to both businesses and consumers.

IDC now expects 135.5 million PC units to ship globally in 2002, a slight increase from 134.1 million units shipped last year. It also cut its 2003 estimates. It now expects 147 million PC units to ship next year, an increase of 8.4 per cent over 2002. Earlier estimates showed 2003 shipments would grow by 11 per cent.

The slight increase for 2002 still tops the market's performance in 2001, when unit shipments fell to 134.1 million units, or 5.1 per cent, from 139.9 million a year earlier. The new forecast, however, is still lower than earlier predictions from IDC, which expected PC shipments to grow by 1.8 per cent to 4.7 per cent for the year.

Slow business sales, and weaker sales to large corporations in particular, are to blame for the dim outlook, said Loren Loverde, director of IDC's PC Tracker program.

"Because there's so much scrutiny of businesses, and profits remain low, and the stock market remains low... we think a lot of companies are postponing some of their upgrades and being careful with their investments," Loverde said.

In comparison, the consumer PC market started the year strong but faded quickly. After good returns in the fourth quarter of 2001 and the first quarter of this year, retail sales fell dramatically in the second quarter.

Companies like chipmaker Intel expect third-quarter PC sales to show only a slight increase over the second quarter, lower than the usual seasonal bump.

Sales to small businesses, the government and schools have been a bright spot this year. Education buying in the United States has been better than expected, for example, as many school budgets have been protected despite overall budget shortfalls in many states. Government spending has also been strong, Loverde said.

"The base vision - that we've got aging (business) systems that need to be replaced and that people want to upgrade their (consumer) systems - still holds true," Loverde said.

"Things are going to continue to improve, but they might not do so steadily. There are going to be some bumps in the road. Both consumers and businesses will be more selective about replacements."

John G. Spooner writes for News.com