Consolidation may hit worldwide PC market, IDC says

IDG News Service - Tumbling demand could affect PC makers next year, leading to industry consolidation, market research firm IDC said on Wednesday.

Competition among PC makers could intensify as consumers and enterprises tighten their budgets during the economic downturn, creating a stagnant market for PC makers, said Richard Shim, personal computing research manager at IDC. That could lead to fewer opportunities for PC makers to sell their products.

The PC market is already pretty mature globally, so the lower-than-expected shipments and falling prices could cause consolidation in the PC industry, either through acquisitions or by forcing competitors out, he said.

In mature markets such as the U.S. and Europe, smaller PC makers may be forced out by larger competitors, Shim said. However, in emerging markets, the smaller PC makers are ripe for acquisition, as larger PC makers are always trying to expand their customer base, he said.

PC shipments worldwide are expected to grow by only 3.8% in 2009, a dramatic drop from the 13.7% growth that IDG predicted earlier this year. Growth estimates for PC shipments for 2010 has been lowered to 10.9%.

While Dell Inc. reported slow growth in PCs shipped for the quarter ended Oct. 31, companies such as Hewlett-Packard Co. and Apple Inc. have defied the economic downturn, reporting consistent growth in shipments. HP reported a 19% rise in unit shipments year-over-year for its most recent financial quarter, while Apple saw 21% growth in Mac shipments for the quarter ended Sept. 27.

Apple has a good chance of recording solid growth through the economic downturn in comparison with other PC makers, Shim said. Historically, Apple has outpaced the industry because it has a loyal customer base willing to pay higher prices for PCs, Shim said.

Consumers will show more preference for laptops over the next few years, with shipments outpacing those of desktops, IDC said. Laptop shipments are expected to grow from 168 million next year to 285.7 million in 2012, compared with desktop shipments, which will grow from 145.8 million in 2009 to 156.6 million in 2012. IDC has not included handhelds in the numbers.

The growth in laptop shipments will be driven partly by larger shipments of netbooks, or minilaptops, which are small, inexpensive laptops with screens of up to 12 in., Shim said. Netbooks are shipping in larger volumes in emerging markets because of their lower prices. However, consumers in the U.S. haven't figured out how to effectively use netbooks, since 20% of buyers return them, Shim said.

After years of double-digit growth, developed countries will see slower PC shipment growth because of the economic downturn. Shipments in the U.S. will decline by 3% in 2009 and continue to grow slowly in the coming years, while countries including Japan and Canada will see low single-digit growth. Growth in Western Europe is expected to continue at 6% in 2009, driven by increased laptop shipments, but that would be a significant drop from the 20% growth it is expected to record in 2008.

PC shipments in emerging Asia-Pacific countries will outpace mature markets, increasing by around 7% in 2009 and jumping up by around 18% to 20% in the following years, IDC said.

After being the fastest-growing markets over the past few years, emerging markets in Latin America and Central Europe will see PC shipment drop through the third quarter of 2009 because of falling prices and currency fluctuations. PC shipments are expected to increase at a slower pace in certain Middle East and African countries compared with recent years.