Growth of PC market to be impacted by economic downturn, says IDC analyst

Framingham (Massachusetts) - Yesterday's stellar IDC report of double-digit year-to-year growth in PC sales may speak of a healthy and mature market, both in the US and worldwide. But a mature market is susceptible to economic forces; and inflationary pressures, plummeting consumer confidence, and reductions in discretionary spending in the wake of rising oil prices may deliver a jolt to the PC market, along with every other mature market, IDC research manager for personal computing David Daoud told TG Daily.

As we reported here yesterday, IDC analysts Loren Loverde and Richard Shim reported a strong surge in PC shipment growth in the third quarter of this year versus the same period in 2004. Worldwide, shipments of personal computers grew at an annual rate of 17.1 percent, which was 4.2 percent above IDC estimates last August; shipments in the US market grew at an 11 percent rate.

"What surprised me is the health of the PC market in general," said Daoud, though even the growth itself could be a pointer toward a worrisome trend: The personal computer market is now a quarter-century old, so the factors that have historically immunized the market from negative economic trends may no longer apply, as the growth trend appears to have been in response to the more stable, growing economy prior to this year's hurricane crises.

Referring to Greenspan's comments, as well as recent inflation and consumer sentiment figures, Daoud said it would be difficult for the PC market to sustain its double-digit growth rate going forward, "particularly as the fundamentals of the economy are not as solid as we would want them to be." As consumers shift their spending away from discretionary items and toward heating their homes and fueling their cars, there's reason, he said, to couple optimism for the apparent opportunities in the PC market, with a little worry.

The economic downturn, whether it becomes a bump or a dip, comes at the same time that the PC market is midway through a critical transition period, stated Daoud, away from desktop-style architecture and more toward mobile designs that are suitable for desktops. "I think we are in a situation where the days of the desktops are being counted right now," he told TG Daily. "We're reaching the end of the desktops as we know it, and we're moving into a new era of mobility, [where] people are going to be shifting - and they have been already - towards laptops."

Yet alongside these continued growth segments and one almost guaranteed shrinkage segment, Daoud stated that the part of the market that gave birth to the PC industry is probably on its last legs. "The desktop as we know it - the desktop that's in your home, in your small office - certainly is going to start fading away over time," he told us.

The shift in focus toward mobility is no surprise to Daoud. "This didn't come out of nowhere. It came from a confluence of factors," he said, including the emergence of WiFi, the shrinking difference in price between desktop and mobile units, and the improving quality of game play on mobile systems. "It's a no-brainer."

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