Plunging desktop demand could mean computer bargains

Buyers are apparently waiting for Vista to ship

Demand for desktop PC motherboards "is falling off a cliff" as users put off hardware purchases until Microsoft Corp.'s Windows Vista operating system launches in January, investment banking firm Goldman Sachs said Saturday.

Motherboard orders for the clone, or white box, desktop PC market have slid nearly 20% from their early October peak.

"Motherboard demand weakness is in line with our view that Vista has a negative impact on [fourth-quarter] motherboard demand, but it happened earlier and more significantly than we expected," said Henry King, executive director of technology research for Goldman Sachs (Asia) LLC in Taipei.

He also blamed the drop in demand on a scarcity of low-cost Intel Corp. microprocessors and Advanced Micro Devices Inc. AM2 processors, since the tight supply of chips means there are fewer low-cost PCs on the market. Demand for low-cost PCs remains hot.

Rising user demand for laptop computers is also pushing demand for desktop motherboards down, he said.

As motherboards and other desktop PC components pile up at the end of October and in November, King believes companies will start a price war to clear their inventories.

The laptop PC sector is also facing some trouble. Strong user demand for laptop PCs is causing a shortage of components, King said.

At an investors conference on Friday, Acer Inc. executives said they expected to be able to procure only 95% of the components they need to sell laptops during the fourth-quarter holiday shopping season. Acer is the world's fourth-largest PC vendor.

"Since the second half of August, we've seen demand rush in. We can't fill all our [laptop] orders," Acer President Gianfranco Lanci said at the conference. Acer expects short supplies of both laptop batteries and microprocessors.

A massive recall of laptop batteries by major PC vendors such as Dell Inc. and Apple Computer Inc. has caused a shortage of batteries because it comes at the time of peak laptop demand. The recall was a reaction to defective Sony Corp. parts that can cause batteries to overheat and possibly catch fire. Sony expects to recall a total of about 9.6 million batteries. 

Copyright © 2006 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon