Gartner slashes PC growth target from 9.3% to 3.8% due to tablets, economy

Hit by an onslaught of tablets as well as a bad economic climate, growth in computer sales this year will be only a fraction of what was predicted earlier, IT market research firm Gartner has said.

It has downgraded the PC market growth for this year from 9.3% announced earlier to just 3.8% today. This has come two months after it warned that PC sales were declining in advanced markets like the US in 2011.

“Western Europe is not only struggling through excess PC inventory, but economic upheaval as well,” said Ranjit Atwal, research director at Gartner. “U.S. consumer PC shipments were much weaker than expected in the second quarter, and indications are that back-to-school PC sales are disappointing,” he added.

He pointed out that the lack of economic optimism is expected to hurt sales in the two core markets through this year and into the first half of 2012.

“An increasing pessimistic economic outlook is causing both consumer and business sentiment to deteriorate in both regions. We’re expecting consumer spending to tighten in response. Business spending will also tighten, but less than the consumer space,” he added.

The forecast has come two months after Gartner reported a 5.6% year on year fall in PC shipments in the US in the quarter ended June. This is in contrast to the repeated upward revision of the overall IT market by Gartner (see bottom)

However, it is not just the economy who is the villain here. A longer term threat, pointed out Atwal, is the emergence of non-PC devices such as tablets.

Tablets are not considered part of the PC family as they are not built on the same hardware architecture, known as the x86 architecture, as PCs. Instead, they are built on RISC chips — a less powerful architecture lately developed for cell-phones and portable devices.

Though the PC architecture was supposed to have come to the tablet World, especially through tablets made by HP and based on Windows 7, none have managed to catch consumers’ imagination. The PC architecture is considered by many to be unsuitable due to its high power consumption.

As a result, top PC brands such as HP, Dell and Microsoft have lost out on the tablet market.

“Media tablets have dramatically changed the dynamic of the PC market, and HP’s decision to rethink its PC strategy simply highlights the pressure that PC vendors are under to adapt to the new dynamic or abandon the market,” said George Shiffler, research director at Gartner.

“Vendors’ tried and true business models are failing as traditional PC functionality is extended to other devices, Gartner pointed out. “Vendors only seem to be flailing as they look for quick fixes to their problems. Unfortunately, the resulting chaos is just creating more confusion across the entire PC supply chain, impacting sell-in,” it added.

It also pointed out that for many youngsters, a PC may not even be their main computing device and that slot is now being taken by tablets more and more regularly.

“For older buyers, today’s PCs are not a particularly compelling product, so they continue to extend lifetimes, as PC shops and IT departments repair rather than replace these systems,” Atwal added.

As a result, only around 352 million PCs are expected to be sold this year.

PC shipments are forecast to see better growth by the end 2012, when units are expected to reach 404 million units, a 10.9 percent increase from 2011, Gartner said. “Total unit shipments in 2012 are expected to barely reach 400 million units, which was originally a target for 2011,” it pointed out.

Sales are expected to pick up in the second half of next year as economies stabilize and new mobile PC form factors enter the market, it added.


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