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Media Tablets Impact EMEA Market Outlook for PCs

Shipments of personal computers in Europe, the Middle East, and Africa (EMEA) continued to decline in the second quarter of 2011 (2Q11) as sustained high levels of inventory inhibited stronger sell-in -- particularly in Western Europe -- and led to a decline of 8.9 percent in overall shipments across EMEA compared with the same quarter last year.

A shift in interest toward other products continued to contribute to weak consumer demand and slow stock depletion across Western Europe, but other parts continued to expand and enjoy positive growth, performing even better than expected -- driven by robust demand for portable PCs.

Western Europe shipment levels further decelerated, recording a decline of 20.9 percent, impacted by persisting high inventory levels and slow consumer demand across the region which prevented stronger sell-in from most vendors.

The situation improved and stock depletion continued, but low retail traffic and a continued shift in budget and interest toward other devices, particularly new media tablets and smartphones, continued to contribute to PC purchases being postponed and led to a contraction of 32.2 percent in consumer sell-in -- affecting both desktop and portable PC form factors.

"Consumer demand is likely to remain lackluster and geared toward media tablets, as a plethora of new models was launched in 2Q with many more to follow in the coming months. Broader product availability and choice will drive fierce vendor competition, which is likely to lead to a price battle," said Eszter Morvay, research manager at IDC.

Commercial demand fared better and recorded a softer 4.3 percent decline, albeit slower than anticipated due to rising concerns about the deteriorating economic climate. Corporate renewals continued to feed some level of demand, but SMB purchases remained cautious, with many businesses holding on to their spending, while the uncertain economic situation in the eurozone contributed to a further drop in public investments.

Southern Europe remained the most impacted, with severe contractions in Spain and Italy, while other key economies, including France and Germany, fared only marginally better, aided by more sustained commercial investment levels, but they remained severely constrained by slow consumer demand.

"Although no major rollout has started just yet, we're seeing very encouraging signs for Windows-based slate tablet adoption. IDC estimates that in 2Q close to 20,000 slate tablets shipped in the Western European commercial segment -- compared with just 5,000 during the same quarter last year. Vertical sectors with field workers, such as utilities, transport, and healthcare, have always represented a key growth opportunity, and current product expansion and improvement could well support accelerated penetration," said Morvay.

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