Studies: PC shipments in recession

The PC sector is in recession as shipments around the globe continue to plummet for two consecutive quarters, analysts said, adding that a recovery appears unlikely in the months ahead.

PC shipments worldwide in the third quarter this year fell by between 12 and 14 per cent compared to the same quarter a year ago, according to analysts at Gartner Inc. and International Data Corp. (IDC).

Gartner blamed the September terrorist attacks on the U.S. for exacerbating problems in an already weakened U.S. economy.

In the U.S., third-quarter shipments slipped by 21 per cent year-on-year, IDC said. However, the events over the last month will only have short-term effects, according to Kitty Fok, Hong Kong-based director of Personal Systems at IDC. “We were noticing that things were picking up in August, but then Sept. 11 happened, and that brought things tumbling down,” she said.

Although demand for PCs in the U.S. did escalate shortly after the terror attacks in U.S because companies located in and around the affected buildings were replacing systems that had been destroyed, raw material shortages and transportation problems resulted in failure to deliver the units, Fok said.

The third quarter usually see an increase in U.S. shipments due to seasonal factors, such as back-to-school consumer buying, but this trend was not reflected this year, IDC said. Sequential growth in the U.S. from the second quarter to the third quarter was a mere 1.7 per cent, compared to over 14 per centgrowth recorded historically, IDC research showed.

Saturation in the PC market also lead to fewer PC units being shipped. In the current market, PC shipment levels are more dependent on PC replacements than shipments to new buyers because there are relatively few new buyers available, Gartner said, adding that as consumer confidence fell, so did PC replacements.

The merger of Hewlett-Packard Co. and Compaq Computer Corp., companies in receivership, typhoons in Taiwan and global political uncertainties were other factors that affected consumer and commercial confidence, driving PC sales down, IDC reported.

Compaq suffered a particularly tough quarter, with Gartner reporting its U.S. shipments dropped by 43 per cent, and IDC reporting a 51 per cent drop.

HP also saw shipments drop in the last quarter due to its dependency on the U.S. home market, which was fairing poorly, Gartner reported.

Dell was the only international PC vendor to show positive growth in the third quarter, with over 5 per centgrowth in the U.S year on year, and over 10 per cent worldwide, IDC and Gartner reported. However, although Dell’s global shipments showed signs of increase in the last quarter, growth rates are lower than the strong double-digit growth in previous years, Gartner said. Global initiatives such as a move to install additional manufacturing facilities in China to support the Japanese market will allow Dell to extend its reach and shipments worldwide, a step that’s needed to foster growth since 65 per cent of its current shipments are to the U.S, according to Gartner.

Asia-Pacific countries saw significant drops in PC shipments with the exception of China, which remains a PC sales stronghold in the region, raising overall regional figures, said IDC’s Fok. “China continues its strong double-digit growth year-on-year, although growth figures are still a little below expectations,” she said.

Latin America’s PC shipments, which have been declining steadily since early this year because of the effect of the decelerating U.S. economy, saw a further 3 per centdrop in the third quarter, Gartner reported.

Looking ahead, companies whose fiscal year ends in December or March will continue to spend, but this may change in the following year when budgets are cut, Fok said. “The worst may be yet to come,” she said.

IDC, in Framingham, Mass., is at

Gartner, in San Jose, Calif., is at