PC market crash averted, says Gartner

Unit sales now expected to grow, though PC revenue still seen plunging by 11%

Reversing earlier doom-and-gloom forecasts, Gartner Inc. now expects global PC shipments to grow 2.8% this year.

Low-priced laptops, such as those in the emerging netbook category, are helping boost unit sales to better-than-expected levels; Windows 7, though, isn't responsible for the upgraded projections, Gartner said today.

At the beginning of this year, Gartner had predicted that 2009 PC shipments would fall by 11.9% from last year. The decline would have been four times greater than the one in 2001 after the dot-com bust.

This year, though, sales of mobile PCs, driven by consumer enthusiasm for inexpensive netbooks, beat forecasts during each quarter, forcing a shift in the initial projections. Mobile PC sales were especially strong in the third quarter during the back-to-school selling season.

Gartner is now projecting that mobile PC shipments will reach 162 million units this year, a 15.4% increase over 2008. Mini-notebooks -- mostly netbooks -- are expected to account for 29 million of that total.

Those mobile PC numbers easily offset the 9% decline expected in desktop PC shipments this year. Gartner said it expects desktop PC sales to total 136.9 million units, or 46% of the total PC market.

Despite the gain in unit sales, Gartner projected that overall PC revenues will likely to fall by 11% from 2008 because of plummeting average selling prices (ASP). That revenue decline continues a trend started late last year when fourth-quarter 2008 revenues fell by about 20% year over year, said Gartner.

Despite Microsoft's recent proclamation that early sales of Windows 7 are very strong, the operating system won't provide much of a lift to the PC market this year, Gartner said.

"We just don't see consumers buying new PCs solely because of Windows 7," said Gartner analyst George Shiffler in a statement. "We are expecting a modest bump in fourth-quarter consumer demand as vendors promote new Windows 7-based PCs, but the attraction will be the new PCs, not Windows 7."

Gartner is cautiously optimistic about the market in 2010, predicting that PC shipments will reach 336.6 million units, for a 12.6% increase over 2009. Enterprise purchases of PCs won't start to accelerate until the second half of the year, the research firm added.

PC revenue will start growing again in 2010, according to Gartner, which projects a modest 2.6% hike. The revenue total will likely be dragged down by ongoing consumer thriftiness in the wake of continued worldwide economic woes.

"Customers have looked for 'good enough' PCs at the cheapest price, and vendors have tried to spur market growth by catering to ever-lower price points," wrote Shiffler. "Given the market's competitive dynamic, we don't see PC ASPs rising anytime soon. As a result, growth in the market value of shipments will significantly lag shipment growth next year and beyond."

Laptop sales are expected to grow by 21.2% to 196.4 million units in 2010, driven by a 41.4% growth in netbook sales, to 41 million units.

However, overall netbook growth is slowing, said Shiffler, as those products face increasing competition from other mobile devices, such as smartphones and ARM-based smartbooks.

Copyright © 2009 IDG Communications, Inc.

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