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PC revenues shrank up to 20% in Q4, but netbooks show gains, Gartner says

Worst year-over-year revenue decline since dot-com bust in 2001

By Eric Lai
January 14, 2009 12:00 PM ET

Computerworld - Revenue from the sale of PCs during the key Christmas quarter plummeted by 15% to 20% from the same period in 2007, according to a preliminary estimate from a Gartner Inc. analyst. As expected, netbook computers cannibalized their larger, pricier notebook brethren.

Though the number of PCs shipped worldwide actually grew 1.1% year over year to 78.1 million during the last quarter of 2008, those numbers were overshadowed by "steep declines" in the average selling price (ASP) of PCs, Gartner analyst Mika Kitagawa said in a Wednesday interview.

The sharp revenue decline that Gartner is projecting would be the worst for the PC market since the third quarter of 2001, when PC dollar sales fell 26% year over year, said Kitagawa.

Unlike 2001's drop-off, which was the result of a price war led by then-market leader Dell Inc. in response to the dot-com crash, the most recent decline was caused by a combination of rising netbook sales and the poor economy.

Perhaps surprisingly, netbooks were only about 5% of all PCs shipped in Q4, according to Kitagawa, up from 3% in Q3.

But netbooks have had an impact disproportionate to their actual popularity, she said. First, they have created a new lower-priced market segment for consumers. Second, they have forced makers of regular notebooks to cut prices on existing laptops or introduce newer, cheaper notebook PCs in response, said Kitagawa.

Despite their rapid rise, it's still too early to declare netbook sales a "sustainable" trend, she said.

According to Gartner, Hewlett-Packard Co. remains the top PC vendor worldwide, with 19.1% market share, while Dell was second with 13.2%, down a full percentage point from last year. Acer Inc., led by its netbook sales, grew shipments 31.1% year over year to take 12.3% of the market. Lenovo Group Ltd. (7.1%) and Toshiba Corp. (4.7%) rounded out the global top five.

While PC shipments registered weak growth worldwide, they actually fell 10% in the U.S. market, primarily because government bodies and schools postponed their computer purchases. In the U.S., Dell stayed atop at 28.6% despite having shipments decrease 16.4%. HP (with 27.5%) was second, followed by Acer (with 15.2%, up from 8.8% a year ago), Apple Inc. (8%, up from 6.7% in 2007) and Toshiba (6.5%).

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