Gartner revises PC market forecast, warns of downside

The PC market won’t grow as fast in 2004 as originally predicted by Gartner Inc. analysts, as concerns about the overall health of the U.S. economy weigh on the market, the market research company said Monday.

Gartner still predicts strong double-digit growth for worldwide PC shipments in 2004. PC vendors should ship 185 million units in 2004, a growth rate of 12.6 per cent compared to 2003. However, during this year’s second quarter Gartner predicted the market would grow 13.4 per cent this year.

PC and chip vendors thought shipments in the second half of 2004 would exceed the usual seasonal growth patterns, but it now looks like growth will stick to those historical patterns, said George Shiffler, principal analyst with Gartner, which is based in Stamford, Connecticut. PC growth in Western Europe and Asia-Pacific has been stronger than expected, while growth in the U.S., Japan and Latin America has been weaker than expected, he said.

Notebook PCs have not kept growing at the record pace that PC vendors enjoyed in 2003. However, shipments are still growing at more than 20 per cent so far this year, Shiffler said.

“What’s happened is that there was a lot of optimism at the beginning of the year, not just for this market but for the overall global economy. That’s faded a little bit, but some people have overreacted to that,” Shiffler said.

The corporate market is in the midst of a drawn-out replacement cycle as companies replace PCs they bought prior to 2000. This latest upgrade cycle should start to diminish over the next few quarters as companies roll out new hardware, and overall PC market growth rates will start to fall heading into next year and beyond, Shiffler said.

IDC plans to leave its 2004 PC shipment forecast intact when it releases its latest information at the end of the month, said Roger Kay, vice president for client computing at IDC in Framingham. Last month, the company predicted worldwide shipment growth of 13.5 per cent.

A rise in oil prices and several disappointing outlooks from IT vendors have caused some concern among financial analysts that the economy’s recovery from the 2001 recession is hitting a few bumps. This means that the PC market is exposed to a greater risk of external events weighing on it than analysts previously expected at the beginning of the year, Gartner’s Shiffler said.

“We’re in the middle of a recovery. It may not be a very sprightly recovery, but it’s a recovery nonetheless,” Kay said.

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