PC shipments stay strong in Q1 thanks to Asian demand

Sales in Europe and the U.S. were weak, however

Despite three years of slowing growth in sales, worldwide PC shipments grew by a strong 12.6% in the first quarter.

The result beat analyst predictions of 11.8% growth, according to a study by market research company IDC in Framingham, Mass. The study includes shipments of desktop, laptop, ultraportable and x86 server PCs, but not handhelds.

The extra demand was generated by markets in Japan and Asia, offsetting weak markets in Western Europe and the U.S.

Emerging markets were stronger because the mature markets suffer from a glut of inventory following delays by Microsoft Corp. in shipping the Windows Vista operating system, said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker.

The unexpected quarterly surge could push worldwide PC sales to grow by 10.8% in 2006 as a whole, beating previous estimates of 10.5%. That growth is driven by falling prices, adoption of portable PCs and aggressive competition among PC vendors and among component vendors, Loverde said.

The IDC study is similar to a June 7 report by the Semiconductor Industry Association, which also cited unexpected demand in the first quarter. The organization revised its forecast of growth in worldwide semiconductor sales from 7.9% to 9.8%, driven by strong demand for PCs, digital cameras, digital televisions and MP3 music players.

Despite this short-term success, PC sales are growing at a much slower rate than in recent years, such as 15.1% growth in 2004 and 16% growth in 2005, IDC said.

The decreasing sales growth has surprised chip and PC vendors. Executives at Intel Corp. and Dell Inc. blamed the softening market for missed earnings targets in the first quarter.

That slow growth will continue, reaching just 11.7% in 2007 and 10.6% in 2008, according to IDC's forecast.

The forces driving growth include sales of portable PCs in mature markets, sales of desktop PCs in emerging markets and the introduction of dual-core processors worldwide.

In raw numbers, PC vendors shipped 179.2 million units in 2004 and 207.9 million units in 2005. They are expected to ship 230.2 million PCs this year, 257.1 million in 2007 and 284.5 million in 2008. The market could reach 333.7 million units by 2010.

Copyright © 2006 IDG Communications, Inc.

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