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PC Usage in APAC Drives the Market Upside

Worldwide PC shipments fell 6.8 percent in the first quarter of 2009 (1Q09), about 1.4 percent better than expected but still the largest decrease since the third quarter of 2001, according to the latest market study by IDC.

Although volume declined less than expected -- thanks to some positive activity in the latter part of the quarter -- the Commercial sector and key macroeconomics indicators remain weak.

The growth of Mini Notebook PCs is playing a dramatic role in the market. Mini Notebook PC shipments of 5.7 million in 1Q09 were ahead of expectations, but contributed to a decline of 3.1 million traditional notebooks from a year ago.

The impact on shipment value was dramatic, with Mini Notebook PCs contributing $2.2 billion in the first quarter of 2009 while the value of traditional notebook shipments declined by $8.4 billion from a year ago.

Mini Notebook pricing is expected to rise with more robust models, and shipment growth is expected to slow with the release of low-cost, thin-and-light Intel CULV and AMD Congo-based systems this fall. However, the growth of Mini Notebooks to 9.5 percent of total PC shipments (17.3 percent of Portables) in 2009 will help drive shipment value down by 17.7 percent even as volumes decline just 3.2 percent.

Mature markets saw growth drop significantly in the past two quarters, but are expected to stabilize and improve going forward. The United States and Western Europe outperformed forecasts as consumer demand was supported by strong ASP declines that were accelerated by growth in Mini Notebook PCs.

Although 1Q09 was promising, shipments in the United States are still expected to decline by just over 2 percent in 2009 and see less than 1 percent growth in 2010.

Western Europe saw a limited impact in 4Q08, but saw growth disappear in the first quarter and is likely to see further contraction in 2Q09 before stabilizing -- putting 2009 growth slightly below zero while double-digit growth will not return until 2011. Projections for Japan were lowered as 1Q09 activity missed expectations, though we continue to expect low-single digit growth in 2010-2011.

Continuing the trend from the fourth quarter of 2008, emerging markets continue to account for the most dramatic shipment declines. Lack of credit along with continued currency devaluation continued a cycle of shrinking resources for channel financing that severely affected Latin America and Central/Eastern Europe.

Canada, along with Latin America and CEMA combined are expecting 2009 to see a decline of more than 13 percent although the region will see double-digit growth in 2010 as it rebounds from 2009.

In contrast to other emerging regions, Asia/Pacific excluding Japan (APeJ) came in slightly above forecast as government spending funneled money to infrastructure improvements and vouchers to stimulate consumer spending.

China in particular fared better than hoped. For the rest of 2009 PC growth should accelerate in APeJ, reaching near 12 percent for 2010, and leading other regions through the end of the forecast.

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