PC demand takes off ahead of Windows 7

IDG News Service - People are snapping up new desktop and laptop PCs long before the launch of Windows 7, a sign of strong demand in the market, analysts say.

Demand for PCs improved in July and August, which is "something special, because the expectation was that many people would delay purchases until after Windows 7 came out in October," said Manish Nigam, head of technology research in Asia for Credit Suisse, at a technology conference in Taipei.

Consumers often wait until after the launch of a major new operating system to buy a new PC for fear of having to pay for the upgrade and to avoid the hassle of loading the new software themselves. This time, strong marketing of free or discounted Windows 7 upgrades for new PC buyers -- ahead of the official launch of the OS on Oct. 22 -- appears to have worked.

There were also fears the global recession might continue to affect PC demand.

PC shipment growth declined for six straight months, from the beginning of the fourth quarter of last year through the end of the first quarter of this year, iSuppli said in a report last week, as the global financial crisis slammed world markets. Sequential growth returned in the second quarter and will continue for the rest of this year as the global economy continues to recover and Windows 7 launches, the market researcher said.

The advertising blitz for Windows 7 "will be a major positive for the PC industry," iSuppli said.

Hype for the new OS, which won solid reviews from many people who tested it, and lower prices for PCs are already drawing buyers.

PC shipments in August beat expectations at investment bank Merrill Lynch by 3 percent, as laptop PC demand picked up in Europe and sales remained brisk in China, the bank said in a report on Tuesday.

The investment bank remains positive about the PC sector due to strong sales by Taiwanese manufacturers and healthy inventory levels. Taiwanese companies build a large number of the world's PC components and own most of the PC assembly factories in China.

Business has been so strong in recent months that shortages of a number of components have become troublesome, including LCD screens, laptop batteries and chips such as DDR3 (double data rate, third generation) DRAM.

Indeed, Converge, a chip and component distributor, says shortages have also emerged for a number of key microprocessors. The rising demand suggests the peak season for PC manufacturing has arrived and it appears healthy, Converge said in its monthly newsletter. The company warned that the shortages will increase prices.