PC Sales To Suffer Sharp Decline – No Duh!

Over at Gartner they are reporting big news in that PC sales will suffer a decline for the first time in history. No duh! We are in a recession people. Folks are fearful of losing their jobs. The stock market is in a steep down turn. Unemployment is on the rise. So making a prediction like this is a no brainer.

Except for Microsoft, who has a self serving announcement about Windows 7 and why we need it, the rest of us are pulling back on spending and using a wait and see approach about major purchases. Gartner in their announcement explains how big the decline will be:

The PC industry will experience its sharpest unit decline in history, with PC shipments totaling 257 million units in 2009, an 11.9 percent decline from 2008, according to Gartner, Inc. Previously, PC units experienced their worst decline in 2001 when unit shipments contracted 3.2 percent.

“The PC industry is facing extraordinary conditions as the global economy continues to weaken, users stretch PC lifetimes and PC suppliers grow increasingly cautious,” said George Shiffler, research director at Gartner.

Both emerging and mature markets are forecast to suffer unprecedented market slowdowns. Up to this point, emerging markets collectively recorded their lowest growth in 2002, 11.1 percent. Mature markets recorded their lowest growth in 2001, negative 7.9 percent. Both emerging and mature markets will handily surpass these previous lows in 2009, with emerging markets expected to post a decline of 10.4 percent and mature markets a decline of 13 percent.

“Growth in both emerging and mature markets will be driven by similar dynamics even if the precise impacts vary somewhat. Slower GDP growth will generally weaken demand and slow new penetration, lengthening PC lifetimes will reduce replacements, and supplier caution will keep inventories at historic lows until confidence in a recovery eventually firms,” Mr. Shiffler said. “The impact of reduced replacements will be especially acute in mature markets, where replacements are estimated to account for around 80 percent of shipments.”

Worldwide mobile PC shipments are expected to reach 155.6 million units, a 9 percent increase from 2008. Desk-based PC shipments are forecast to total 101.4 million units, a 31.9 percent decline from 2008. Mobile PC growth will be substantially boosted by continued growth in mini-notebook shipments; excluding mini-notebooks, other mobile PC shipments will grow just 2.7 percent in 2009.

Worldwide mini-notebook shipments are forecast to total 21 million units in 2009, up from 2008 shipments of 11.7 million units. Mini-notebooks will cushion the overall PC market slowdown, but they remain too few to prevent the market’s steep decline. Mini-notebooks are forecast to represent just 8 percent of PC shipments in 2009.

“The mini-notebook market is dividing as vendors offer more systems with 9” to 10” screens in addition to those to with 7” to 8” screens,” said Angela McIntyre, research director at Gartner. “For the most part, users are moving toward systems with larger screens and greater capabilities; systems with 8.9” screens were the standard in the second half of 2008. Naturally, systems with larger screens and greater capabilities cost more but prices in general continue to fall. In late 2008, the average price in the U.S. for a mini-notebook with an 8.9” screen, Microsoft Windows XP and a 160 GB hard drive was around $450. We expect the average price of the same machine to drop to $399 by the end of this year. Mature markets continue to be the primary consumers of mini-notebooks, but as prices continue to fall, they are likely to attract increasing numbers of emerging market buyers.”

So here is a mini experience I encountered on Monday evening. I was speaking with an IT professional who is in charge of about 200 computers at the company where he works. The average age of the systems they are using is about 5 years old. As you guessed, they are still using Windows XP. He stated his company has no intention of upgrading to Vista, Windows 7, or any OS upgrade until these systems no longer run any longer.

But what do you think?

Comments welcome.

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