Gartner drops 2011 PC forecast with shift to tablets

IDG News Service - Gartner on Thursday sharply dropped its worldwide PC shipment growth forecast for this year and next, citing economic struggles and a market shift from PCs to devices like tablets.

Worldwide PC shipments will amount to roughly 364 million, a 3.8% increase compared to last year, Gartner said. That is a sharp drop from the firm's previous forecast of 9.3% growth, which was made in June before economic struggles heightened in mature markets such as U.S. and Europe.

Gartner also dropped its PC growth forecast for next year, but said the growth will be more respectable. PC shipments will grow by 10.9% in 2012 compared to this year, lower than the 12.8% previously projected by Gartner. Unit shipments will total 404 million.

Tablets are attaining more PC functionality, and that is affecting PC sales, Gartner said in a statement. Younger audiences are shunning PCs for tablets, and PC-reliant consumers and businesses are delaying upgrades in struggling economies.

With dropping sales and growing unit inventories, the PC business model is now under question, which has been highlighted by Hewlett-Packard, Gartner said. HP last month said it was looking to either sell or spin-off its PC unit to focus on its higher margin enterprise business. The dropping sales and razor-thin PC margins also hurt the revenue of Dell and Acer, though Lenovo recorded strong PC revenue growth because of strong sales in the home turf of China.

"Tablets have dramatically changed the dynamic of the PC market, and HP's decision to rethink its PC strategy simply highlights the pressure that PC vendors are under to adapt to the new dynamic or abandon the market," said George Shiffler, research director at Gartner.

Purchases of tablets such as Apple's iPad have grown quickly in recent quarters. Some analysts have said tablets would make PCs irrelevant, though others argue that the tablet market is still evolving, and that the PC will continue to survive for content and document creation.

Consumers are also tightening wallets and businesses are holding back PC purchases, especially in developed countries such as Europe and U.S., said Ranjit Atwal, also a research director at Gartner.

"Western Europe is not only struggling through excess PC inventory, but economic upheaval as well. U.S. consumer PC shipments were much weaker than expected in the second quarter, and indications are that back-to-school PC sales are disappointing," Atwal said.