PC shipments drop as credit crunch bites

After several years of seemingly tireless 15 per cent quarterly growth, the PC industry hit a wall at the end of 2008.

Overall PC shipments worldwide dropped 0.4 per cent to 77.3 million units during the fourth quarter, according to IDC's Worldwide Quarterly PC Tracker study released Wednesday. The results are more alarming for the embattled industry considering that the quarter - the worst in several years - wasn't helped out more by the Christmas shopping season. There hasn't been an overall drop in shipments since the second quarter of 2001, after the last recession.

Loren Loverde, PC market analyst for IDC, said: "We had projected growth of about 6.5 per cent [for the fourth] quarter. To come in basically at zero shows how fast the market has deteriorated. We were just at 14 per cent in [the] third quarter."

At the end of the third quarter of 2008, IDC was still projecting a small amount of growth (less than three per cent) for most quarters of 2009 but so many factors have changed since then, Loverde said.

"We've had basically lower GDP projections, questions about how US bailout money is going to be spent... The momentum of deteriorating economic conditions is going to continue," he said. "So it's safe to say 2009 will come in below expectations."

While worldwide market leader HP managed to eke out 3.1 per cent growth in shipments, second-place Dell saw a 6.3 per cent decrease. Lenovo also saw its global shipments drop almost five per cent.

There were a few bright spots in the midst of the economic gloom. Acer, Apple and Toshiba, all heavily invested in laptops and therefore more insulated from the long-declining desktop market, saw high rates of growth.

Acer's momentum in Europe continued but the Taiwanese manufacturer also made significant headway in the US during the quarter while expanding its presence at retail. "Acer really went after low-cost portables and they shipped significant volume through Best Buy," said Loverde.

Specifically the PC maker has found success with its Acer One Netbook, where it's been incredibly aggressive on price compared to market leader HP.

Apple's done well for opposite reasons, growing 7.5 per cent despite refusing to offer a computer for less than $999. The Mac maker's market share expanded again in the US, reaching 7.2 per cent, the highest in at least a decade.

And while the emerging netbook category will continue to expand, it hasn't proved itself as a significant help to the industry's growth as of yet. Almost five million netbooks shipped in the fourth quarter, doubling the total for all of 2008. That brings netbooks' share of the portable PC market to seven per cent, an impressive start for a category that essentially didn't exist until a little over a year ago. IDC expects netbook volumes to double in 2009.

Original article: PC shipment growth drops to virtually zero in Q4 from CNET News.com