PCs Hit Biggest Slump Ever

PC unit shipments will experience the “sharpest unit decline in history” in 2009, according to a new research report issued by Gartner, thanks to a moribund economy. Intel, AMD, Via and others are already suffering the effects, although the small sub-sector of mininotebooks, actually increased over 2008.

The report predicts that some 257 million units will be shipped in 2009, a decrease of 11.9 percent from 2008. This slump dwarfs the previous biggest drop, when shipments declined 3.2 percent in 2001, after the tech-bubble burst.

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

PC market growth in emerging markets is expected to decline 10.4 percent, even as mature markets decline some 13 percent; previously, the worst year for emerging markets was 11.1 percent growth in 2002, while mature markets suffered a 7.9 percent dip in 2001.

“Growth in both emerging and mature markets will be driven by similar dynamics even if the precise impacts vary somewhat,” Shiffler added in the report. “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.”

Intel, Advanced Micro Devices and Via are just some of the suppliers being affected by the global decline in PC sales. Even Apple has seen its sales decline in the first months of the year.

That said, the report did feature a few bright spots, however dim. Worldwide mobile PC shipments are expected to increase 9 percent from 2008, reaching 155.6 million units, boosted by consumer and enterprise interest in mininotebooks. By contrast, Gartner believes that shipments of desktop PC shipments will decline 31.9 percent from 2008, to 101.4 million units.

Mininotebook – or “netbook” – shipments are predicted to total 21 million units in 2009, nearly doubling the 2008 total of 11.7 million units. Although the news is positive, mininotebooks will make up just 8 percent of PC shipments in 2009, cushioning—but not reversing—the overall decline.

Netbooks will continue to grow in 2010, according to some analysts, though still as a small proportion of the overall PC market.

“We’re looking for 21 million this year, and 30 million next year as kind of a most-likely case—but growth could be as high as 28 million,” Shiffler said in an interview with eWEEK. “[Mininotebooks are] new and still flashy, so they’re still attracting people. They work for some people, but not for others, and I think the market is still discovering that; so that will help growth.”

“For the most part, users are moving toward systems with larger screens and greater capabilities; systems with 8.9-inch 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,” Angela McIntyre, research director at Gartner, said in the report.

“Mature markets continue to be the primary consumers of mininotebooks,” she continued, “but as prices continue to fall, they are likely to attract increasing numbers of emerging market buyers.”

For the overall PC market, prospects could very well improve over the next few quarters.

“We’re looking for things to bottom out in the third quarter of this year,” said Shiffler. “You’ll probably start to see growth in the fourth quarter, perhaps even pretty good growth. But we probably won’t see robust growth until next year.”