Worldwide PC shipments to grow 11% in 2008 to 293 m units – Gartner

Market could fall victim to weaker global economy warning issued

STAMFORD, Conn.,— Worldwide PC shipments are forecast to total 293 million units in 2008, up 10.9 percent from 2007 shipments of 264 million units, according to Gartner, Inc. However, analysts warned that growth could fall into single digits if global economic headwinds strengthen.

“In many respects, the PC market is fundamentally in good shape. Mobile PCs continue to exhibit strong momentum, emerging-market growth remains robust, and desk-based PC replacement activity is stirring,” said George Shiffler, research director at Gartner. “However, a deepening U.S. recession, the rising possibility of a sharp slowdown in China’s economy following the Beijing Olympics, and the elevated price of oil mean global PC shipments face increasing economic headwinds.”

Gartner said worldwide demand for mobile PCs remains one of the key drivers of strong PC market growth. Technology and design improvements have not only lowered the price of mobile PCs but also significantly improved their value proposition relative to desk-based PCs. The relative value of mobile PCs has also been bolstered by the continued expansion of mobile access, and this increase in value continues to stimulate strong demand for mobile PCs across both mature and emerging markets. Gartner analysts said mobile PC shipments will gain additional momentum as so-called “affordable” mobile PCs, which address price points once thought impossible for mobile PCs, become more widely available.

Emerging markets are also a key driver. Emerging-market PC unit shipments grew 22 percent in the fourth quarter of 2007, accounting for 60 percent of worldwide PC unit growth. Robust PC shipments to emerging markets are being fueled by several factors, the most important of which is strong economic growth. “Rapid economic growth is not only stimulating PC demand among business, governments and educational institutions, but also generating new demand among the ever-growing numbers of increasingly affluent consumers,” Mr. Shiffler said.

Finally, replacements are poised to become a key driver as well. Desk-based PCs experienced their last major replacement cycle from 2004 to 2005. Gartner’s replacement model indicates that desk-based PCs are on track to experience another, albeit substantially more modest replacement cycle, from late 2008 to early 2010. In addition, mobile PCs remain on track to experience a steady increase in replacement activity through late 2009. “Replacements account for 60 percent of PC shipments worldwide and nearly 80 percent of U.S. PC shipments, so growing replacement activity will provide a helpful boost to PC growth,” Mr. Shiffler said.

While these factors bode well for PC vendors, PC shipment growth will ultimately depend on the interplay between these drivers and the global economy.

“Slowing GDP (gross domestic product) growth can and does affect PC shipments through its impact on consumer incomes and business profits,” said Mr. Shiffler. “Although the impact has probably softened over time as PC prices have fallen and PCs have become more indispensable to work and play, PCs are still far from being completely recession-proof. A deeper and more extended global slowdown emanating from the U.S. and China would slow PC unit growth even more by sapping mobile PC demand, slowing emerging-market growth, and delaying replacement activity.”

Additional information is available in the Gartner report “Market Trends: Worldwide PC Market Scenarios, 1Q08” The report is available on Gartner’s Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=618416&subref=simplesearch.