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Asia-Pacific PC Adoption is Key to Disruption

Worldwide PC shipments grew by 12.5 percent in the second quarter of 2007 (2Q07), according to IDC. Asia/Pacific (excluding Japan) returned as the fastest growing region with volume increasing more than 20 percent from the same quarter one year ago.

A competitive market in the United States also helped boost overall growth with other regions expanding in line with or slightly behind forecasts. Channel expansion and competition for the consumer and small business segments added to the trend toward Portable systems as key market drivers.

"This was another strong quarter that sets the stage for solid growth in the second half of 2007 and 2008," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "The success of HP and Acer as well as the rapid changes occurring at Dell in recent quarters underline just how dynamic the PC market is these days. Despite the temptation to simplify, the market is not just about replacing systems at the lowest cost. System design, customer service, channel coverage, and market expansion are all playing key roles in winning business."

"The quarter ended better than expected, driven by intense channel activity and vendor strategic adjustments. The indirect channels, for instance, have proven to be an important source of growth, a trend likely to continue in coming quarters," said David Daoud, manager of Personal Computing and PC Tracker Programs. "New product announcements are likely to stimulate demand in the coming months. However, IDC warns that a return to double-digit growth in the U.S. market will be difficult to achieve."

I believe that the correlation between PC market growth and broadband services market growth will continue into the foreseeable future. Furthermore, the development and availability of low-cost computers will be instrumental in assuring the continued rise of China and India as formidable powers in the Global Networked Economy. The resulting effect of this phenomenon on developed nations is one of the key disruptive trends of the 21st Century.

The regional outlook includes:

- The United States market accelerated to 7.2 percent growth following a slow second half of 2006 as aggressive competition and repositioning continues. The Portables market remained strong, driven by consumer retail and channel activity. Although Desktop shipments continued to contract, shipment volume was higher than anticipated. Dell remained the top vendor, though still losing ground as it restructures and faces rising competition. HP sustained growth of 26 percent, gaining share from a year ago. Toshiba and Acer each accelerated growth substantially.

- EMEA continued to grow at a solid, double-digit rate as Portable adoption and renewals remained key drivers. Consumer and SMB segments continued to respond very positively to new products and attractive price points. Competition among the leading vendors, HP and Acer in particular, remained very active with channel outreach and product promotions. Desktop volume increased only minimally as the shift to portables continues and corporate refreshes remained moderate.

- In Japan, Portable volume was flat from a year ago and a double-digit decline in Desktops kept total market growth in negative territory. Commercial demand remained soft following the fiscal year-end in Q1 while summer promotions helped Consumer growth improve from a very slow 2006.

- Asia/Pacific (excluding Japan) continued to accelerate with Portables growth at about 50 percent and with the Greater China region being a primary contributor to the regional total as vendors prepared their channels for summer promotions. In addition, nearly every country in the region posted double-digit year-on-year Portables growth.

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