IDC predicts slower PC growth in 2006

PC shipment growth next year will decline from its current heights, but should still remain strong as users continue to upgrade to notebooks, IDC said Tuesday.

With just 11 days left in 2005, IDC is upping its forecast for 2005 growth to 15.8 per cent, up from an earlier prediction of 14.1 per cent growth for the year. The Framingham, Massachusetts, market research firm expects PC vendors to ship 207.7 million units worldwide in 2005, significantly more than the company forecast last year and as recently as March.

Next year, however, that growth will slow to 10.5 per cent, according to IDC’s forecasts. Demand appears to be strong heading into the new year, but the company is being cautious with its forecast because the runaway growth following the tech recovery of the last few years can’t last forever, said Richard Shim, an IDC analyst.

Consumer buying has been much more resilient than expected, with a 20.5 per cent improvement in worldwide consumer purchases this year, IDC said. Intel Corp., the world’s largest chip maker, has been running its factories flat-out all year trying to keep up with strong demand for its chips. It plans to open new factories next year to gain additional capacity. Advanced Micro Devices Inc. (AMD) has also started production at a new chip-making facility in Germany.

“The stuff that’s driving growth in 2005 was developing regions and falling prices. Nothing changes there” in 2006, Shim said.

But potential buyers might hold off on purchasing new systems as dual-core chips from Intel and AMD work their way into mainstream configurations and Microsoft Corp. finally releases Window Vista toward the end of the year, Shim said. “Folks want to see what kind of benefits they’ll get” from the new technologies, he said. Analyst firm Gartner Inc. is advising its business clients to conduct thorough tests of Windows Vista before deploying the new operating system, which could delay their purchases until 2008.

The Asia-Pacific region, which excludes Japan, is expected to lead the way in PC buying next year, IDC said. Led by China, the region is experiencing an economic boom that carries over into PC buying, and barring any surprises such as rising oil prices or an outbreak of the bird flu, that boom should continue, IDC predicted.

The U.S. and Western Europe are more mature economies that will not grow at the same pace, but PC demand remains strong as desktop users convert to notebooks, IDC said. By 2008, IDC believes notebook shipments should represent a majority of PC shipments in the U.S., a trend that was seen already this year in some portions of the retail market.

IDC is a division of International Data Group Inc., parent company of IDG News Service.

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