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Tuesday, November 30, 2010
 Worldwide PC Shipments to Grow 14 Percent in 2010
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Message Text: Worldwide PC shipments are on pace to total 352.4 million units in 2010, a 14.3 percent increase from 2009, according to the latest preliminary forecast by Gartner.

These projections are down from Gartner's previous PC shipment forecast in September of 17.9 percent growth.

2011 worldwide PC shipments are forecast to reach 409 million units, a 15.9 percent increase from 2010. This is down from Gartner?s earlier estimate of 18.1 percent growth for 2011.

"These results reflect marked reductions in expected near-term unit growth based on expectations of weaker consumer demand, due in no small part to growing user interest in media tablets such as the iPad," said Ranjit Atwal, research director at Gartner. "Over the longer term, media tablets are expected to displace around 10 percent of PC units by 2014."

While Gartner does not regard the current dynamics in the PC market quite yet as an inflexion point, analysts do see many disruptive forces coming together that will weaken the market moving forward.

"PC market growth will be impacted by devices that enable better on-the-go content consumption such as media tablets and next-generation smartphones," said Raphael Vasquez, research analyst at Gartner. "These devices will be increasing embraced as complements if not substitutes for PCs where voice and light data consumption are desired. It is likely that desk-based PCs will be adversely impacted over the long-term by the adoption of hosted virtual desktops, which can readily use other devices like thin clients."

"PCs are still seen as necessities, but the PC industry's inability to significantly innovate and its overreliance on a business model predicated on driving volume through price declines are finally impacting the industry's ability to induce new replacement cycles," said George Shiffler, research director at Gartner. "As the PC market slows, vendors that differentiate themselves through services and technology innovation rather than unit volume and price will dictate the future. Even then, leading vendors will be challenged to keep PCs from losing the device 'limelight' to more innovative products that offer better dedicated compute capabilities."

In the near term, many consumers and businesses will continue to refrain from buying PCs, as they collectively rebuild their finances in the face of slower income growth, weaker employment gains and a cloudy economic outlook. Over the longer-term, users are likely to slow PC replacements and extend PC lifetimes as they turn to other devices as their primary computing platform.

Gartner analysts said there are five dynamics that are challenging the PC industry.

"While we expect a continued upside in our emerging market forecast, leading to emerging markets gaining more than 50 percent of the total worldwide PC market by the end of 2011, mature markets will face mounting challenges. Furthermore, in emerging markets, there is good chance that consumers will simply leap frog PCs and move directly to alternative devices in the coming years rather than following the traditional pattern of purchasing a PC as their first computing device," Gartner said.

Consumers in the U.S. and Western Europe continue to postpone purchases in the face of financial and economic uncertainty. However, Gartner said that the bigger issue for PCs in the home market is consumers temporarily, if not permanently, forgoing PC purchases in favor of media tablets.

Media tablet capabilities are expected to become more PC-like in the coming years, luring consumers away from PCs and displacing a significant volume of PC shipments, especially mini-notebooks, according to Gartner. Media tablets are rapidly finding favor with PC buyers who are attracted to their more-dedicated entertainment-driven features and their instant-on capability.

The ascent of emerging devices will have an important indirect impact on PCs ? the extension of average PC lifecycles. The effect of this ascent will be to spread traditional PC functionality over a variety of complementary devices. As this happens, analysts foresee users extending the lifetimes of PCs because there will be less need to replace them as often.

Hosted virtual desktops (HVDs) are not expected to earnestly impact mature professional markets until 2012, at the earliest. Longer term, users that adopt HVDs to access their compute capabilities will do so predominantly by using refurbished PCs and thin clients. These alternative devices will displace new PC units, thereby reducing expected future desk-based shipment growth.
 
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