Friday, August 31, 2012

Decline of Global Demand for PCs Raise Concerns

The overall PC market will grow by just 0.9 percent in 2012, as mid-year shipments slow and the global outlook continues to be bleak. According to the latest market study by International Data Corporation (IDC), 367 million PCs will ship into the market this year -- that's up just a fraction of a percent from 2011, marking the second consecutive year of growth below 2 percent.

Slowing growth in the Asia-Pacific region has reduced the impact of emerging market growth, while more mature regions -- such as the United States -- have seen volume actually decline. People that were surveyed are apparently considering spending on other consumer electronics products -- such as media tablets and smartphones.

IDC believes that product updates planned for later this year should help to revive PC growth, but I'm not convinced. The competitive environment is likely to entice buyers to get the most value for their money -- clearly, that's unlikely to be expensive new Ultrabooks that feature the Windows 8 OS.


IDC says that the uncertainty about promised PC product updates should be addressed soon and may be accompanied by a modest improvement on pricing. Regardless, consumers and businesses alike are expected to be cautious with new spending and when they will decide to replace older products.

The buyer hesitation will limit growth expectations, which were lowered slightly in the medium- and long-range forecast. IDC now expects worldwide PC shipment growth will average 7.1 percent from 2013-2016, that's down from the 8.4 percent compound annual growth rate (CAGR) previously forecast for 2012-2016.

"The U.S. market will remain depressed until Windows 8 products hit the shelves in the fourth quarter of 2012. The industry is responding by reducing shipments of PCs and clearing Windows 7-based inventories to pave the way for a new generation of systems. But, as we move into the tail end of the third quarter, PC activity will continue to slow as demand drops," said David Daoud, research director, Personal Computing at IDC.

IDC expects that 2012 will end with shipments in the U.S. falling by 3.7 percent, marking the second consecutive year of contraction. That being said, IDC remains somewhat optimistic that PC penetration opportunities in emerging markets will help to sustain double-digit Portable PC growth in the long run.

But a host of variables will lead to a subdued second half of the year with only low-cost consumer notebook PCs likely to stay in growth mode for the remainder of 2012. Moreover, the current outlook continues to raise concerns about the viability of companies that have missed the market transition to media tablets.

No comments: