PC market to suffer first decline since Dot-Com bubble!

EL SEGUNDO, USA: For the first time since the Dot-Com bust of 2001, the global PC market will suffer a contraction in unit shipments in 2009, due to a combination of falling IT spending and plunging sales of desktop computers, iSuppli Corp. predicts.

Global PC shipments are expected to decline to 287.3 million units in 2009, down 4 percent from 299.2 million in 2008. iSuppli previously forecasted 0.7 percent growth in PC shipments for the year.

“An annual decline in unit shipments is highly unusual in the PC market,” observed Matthew Wilkins, principal analyst, compute platforms for iSuppli. “Even in weak years, PC unit shipments typically rise by single-digit percentages. The last decline—in 2001—was a 5.1 decrease in unit shipments due to the extraordinary impact of the Dot-Com bust, which caused inflated IT spending levels from the previous years to collapse.”

The primary factor driving the decline in the PC market in 2009 is an expected 18.1 percent plunge in desktop shipments. Unit shipments of desktop PCs will amount to 124.4 million in 2009, down from 151.9 million in 2008.

Entry-level servers -- which iSuppli includes in its definition of PCs -- also will suffer a decline, with shipments falling to 6.9 million units, down 9.5 percent from 7.7 million in 2008.

In contrast, notebook PC shipments in 2009 will rise by 11.7 percent to reach 155.97 million units, up from 139.6 million in 2008. Notebook PC shipments will exceed those of desktops on an annual basis for the first time ever in 2009.

“Mobility is winning out in the PC market,” Wilkins said. “Businesses and consumers continue to embrace notebooks PCs because of the benefits of mobility and the near-equal performance and feature set. This is cutting into desktop PC shipments.” Meanwhile, enterprise spending on IT technology is hurting PC sales.

“Tight budgets are putting the squeeze on corporate IT spending,” Wilkins said. “This is hitting desktop and server sales particularly hard.” The figure presents iSuppli’s forecast of global annual PC shipments.

iSuppli Figure: Global PC Shipment Forecast (Thousands of Units)Source: iSuppli, July 2009

Rocky bottom
While iSuppli is currently correlating its data for second-quarter 2009 PC shipments, iSuppli’s forecast for the second quarter calls for flat shipments rising a scant 0.1 percent to reach 66.54 million units, up from 66.45 million in the first quarter.

In the third and fourth quarters, shipments are expected to rise sequentially by 11 and 8.9 percent, respectively.

“Although our expectation is for shipments to rise vigorously in the third quarter on a sequential basis, conditions remain weak compared to 2008.”

Shipments in the third quarter will be down 6.5 percent compared to the same period in 2008.

However, in the fourth quarter, shipments will rise by 3.6 percent compared to a year earlier. This trend will continue in 2010, with shipments rising on a year-over-year basis during every quarter of the year. For all of 2010, global PC shipments will rise by 4.7 percent from 2009.