Research firm expects notebook market to rebound in Q3

Austin (TX) - DisplaySearch said in its quarterly notebook PC shipment and forecast report sales of notebook PCs in the second half have begun to rebound, after posting sluggish performance in the first half of 2004.

The company estimates sequential gains of eight percent compared to the second quarter with sales increasing from 10.7 to 11.6 million units. DisplaySearch forecasts the segment to further improve in the fourth quarter with sales climbing by 11 percent sequentially.

The reason for the positive outlook was attributed to a mostly consumed excess notebook inventory that plagued the channel in the first half of the year. Falling panel prices and the back-to-school season are poised to stimulate demand, DisplaySearch said in a statement.

Sales of notebook PCs in the first half of 2004 fell below panel shipments as sluggish sales of desktop replacement systems and decreased panel purchases ahead of the then-rising panel prices contributed to the situation. After a record quarterly volume of 11.3 million notebook PCs were shipped in the fourth quarter of 2003, shipments dropped in each of the following two quarters. Notebook PC sales fell to 10.9 million units in the first quarter and 10.7 million in the second quarter.

The research firm highlighted a "dramatic surge" in demand for wide aspect ratio notebook PCs. In the prior three quarters, wide notebook PCs represented 14-16 percent of all notebook systems sales. In the third quarter, this number is expected to leap to almost 25 percent of notebook PC sales.

By resolution, WXGA (1280 × 800) notebook module shipments are expected to grow to more than 19 percent of the market, up to 2.2 million units. If shipments of WXGA+ (1280 × 854) panels are considered, the share increases to just over 21 percent and units to 2.5 million. XGA continues to be the dominant resolution, and is expected to represent a 66 percent share and 7.7 million units in the third quarter.

After 17 months of increases for the Average Selling Price (ASP), notebook PC LCD sales peaked at $235 in the first quarter of this year. In the third quarter, ASPs are expected to fall to $208 and then continue to fall as the market over-supply widens.
The notebook PC market is expected to grow to 46.2 million units for all of 2004.

The price gap between 14.1" XGA and 15.0" XGA panels has shrunk to just over $5 in the third quarter. By the third quarter of 2005, DisplaySearch expects that 15.0" panels will surpass 5 million units per quarter and that 14.1" panels will be flat at 3.3 million from now through that quarter.

At the highest resolutions (UXGA 1600 × 1200, WUXGA 1920 × 1200, and QXGA 2048 × 1536), growth will be driven by the wide form factor, according to the research firm. WUXGA is expected to slowly and steadily grow to more than 4.5 percent share by mid-2006, while UXGA and QXGA will together represent a 2.5 percent share at that time, DisplaySearch said.