Mini-notebooks drive PC market growth

DQW Bureau
30 Jun 2009

Worldwide PC shipments are on pace to reach 274 million units in 2009, a six
percent decline from 2008 shipments of 292 million, according to the latest
forecast by Gartner. Gartner now expects the PC market to post positive growth
in the fourth quarter of 2009, setting the stage for a healthy market recovery
in 2010 with units forecast to grow 10.3 percent.

Gartner predicts that the Indian PC market will be flat in 2009, witnessing a
decline of 0.8 percent from 2008, which is an upward revision from its earlier
projection made in February 2009 of

3.7 percent decline.

Gartner's latest forecast is somewhat brighter than its preliminary forecast
from mid-May, which anticipated a 6.6 percent unit decline in 2009, and
considerably stronger than its last detailed forecast from March, which
projected a 9.2 percent unit decline. However, analysts urged caution and said
that while the market appears to be strengthening, it is still premature to say
that the worst is over and the market is recovering.

“PC unit growth was stronger than we expected in all markets but Eastern
Europe in the first quarter of 2009. In particular, consumer shipments were much
stronger than we anticipated,” said George Shiffler, Research Director, Gartner.
“However, professional shipments continued to struggle, and we think much of the
growth in consumer units was due to vendors and the channel restocking
inventories rather than an upsurge in demand. We expect units to contract
roughly 10 percent year over year in both second and third quarter 2009 before
they post positive growth in the fourth quarter,” he added.

Mini-notebooks continued to cushion the market's decline in the first quarter
of 2009. Units remain on track to reach 21 million this year and 30 million next
year. “However, mini-notebook units posted their first quarter-over-quarter
decline in the first quarter of 2009,” said Shiffler. “While this was in part
the result of the general contraction in PC shipments to the EMEA region, it
also reflects increasing competition between mini-notebooks and low-end
mainstream mobile PCs as the former evolve toward larger screen sizes, and the
latter continue to drop in price. In effect, mini-notebooks are becoming just
another value-based mobile-PC offering,” he emphasized

Mobile-PC units are forecast to total 149 million units in 2009, a 4.1
percent increase over 2008, but spending on mobile PCs is expected to decline
12.8 percent as mobile-PC average selling prices (ASP) continue to drop at an
unprecedented rate. The drop in mobile-PC ASP reflects a pronounced market shift
to lower-priced mobile PCs, driven in part by mini-notebooks but also by
performance-for-price improvements in low-end mainstream mobile PCs. Desk-based
PC units are now expected to total 125 million, a 15.7 percent decline compared
with 2008; spending is expected to decline 26.6 percent.

“Both mobile-PC and desk-based PC units are being held back by users
extending PC lifetimes and delaying replacements in response to the ongoing
economic slowdown,” Shiffler said. “The good news for the industry is that
delayed replacements won't be lost replacements. Our research indicates
replacements should grow strongly in 2010 and 2011, helping to power the
market's recovery.”

Gartner analysts said the impact of Windows 7's release in October on the PC
market is likely to be very modest.

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