PC outlook improves as consumer spending stabilizes shipments

FRAMINGHAM, USA: As in the first quarter of 2009, global PC shipments again came in slightly ahead of expectations in the second quarter (2Q09), lessening fears over the extent of the PC market slump.

Worldwide PC shipments (including Desktop and Portable PCs, but excluding x86 Servers) were down 3.1 percent from the second quarter of 2008 –- a notable improvement over an expected decline of 6.3 percent, according to IDC’'s Worldwide Quarterly PC Tracker.

All regions either met or surpassed expectations. Although the global downturn is still making its effects felt in the PC industry, the slump has been mitigated by a PC market which has seen the computing experience evolve to be more personal, portable, and cost-oriented rather than performance-driven. Portable PCs continue to be the primary driver of volume and growth with all regions seeing strong Portable shipments.

"These results are a very positive indicator for the second half of the year," said Loren Loverde, program director for IDC’s Tracker Program. "We are seeing continued demand from consumers and limited impact from supply chain factors such as inventory balancing.

"New product launches in the second half of the year combined with seasonal growth and greater economic confidence resulting from factors such as government stimulus, a more liquid housing market, relatively stable stock market and interest rates, and progress in the auto and financial industries, should support the expected return to growth by year-end."

While the market has outperformed expectations for a second consecutive quarter, the lack of commercial activity remains a drag on growth. The commercial segment remains more conservative with spending, focusing on other priorities and preserving cash. As a result, the segment has not been as motivated by falling prices and new portable designs as the consumer segment.

“Despite continued contraction from a year ago, the US market managed a better-than-average sequential performance –- an indication of a stabilizing or improving market. While the sequential growth may be a hint of recovery, the market’s focus on lower-price PCs and Mini Notebooks is likely to drag the value of the market to lower levels,” says Bob O'Donnell, vice president, Clients and Displays.

“The market continues to rely on consumer purchases, with a substantial weakness in the commercial space. We expect to see more of the same as we enter the busy shopping season of the second half of the year. In the longer term, an expected recovery in the commercial segment should boost growth in 2011.”

Regional Outlook
United States: The US PC market declined by 3 percent year over year in the second quarter, matching forecasts for the market. Ongoing healthy volume through Retail spurred Portables to exceed forecasts, but that was offset by Commercial sluggishness and Desktop volume below expectations. Dell regained its lead by a small margin, but remains hampered by slow commercial spending.

Europe, Middle East, and Africa (EMEA): In line with IDC's forecast, the EMEA PC market continued to contract for the second consecutive quarter. The Portable PC market performed ahead of expectations, maintaining single-digit positive growth, thanks to continued uptake of mini notebooks in the consumer segment and additional momentum generated by the telco channel. But whilst the consumer market held up well, spending in the commercial segment remained constrained across all form factors.

Japan: Shipments declined slower than expected in the second quarter, with year-over-year growth improving notably from the first quarter. Nevertheless, the Japanese market continues to be plagued by tepid Commercial activity and a Consumer market shifting towards lower cost Portables, which has benefited non-Japanese OEMs with a clear focus on Mini Notebook PCs.

Asia/Pacific excluding Japan (APeJ): PC shipments exceeded forecasts, fueled by very strong Portables growth, particularly in Southeast Asia. China was a bright spot in the region, while India came in close to expectations. Shipment growth returned to positive territory after several quarters of declining volume.

Vendor Highlights
HP: It made further inroads into Consumer Portables through the Retail channel and continued to gain share overall. The vendor grew 3.6 percent year over year worldwide with above-market performance in the U.S. The company also performed well in Europe and Asia/Pacific.

Dell: Although still heavily affected by the Commercial slump, Dell saw good growth from consumer-focused SKUs and reclaimed the number 1 spot in the US. The company continues to restructure operations, develop its Consumer business, and should benefit from an eventual rebound in the Commercial segment.

Acer: It continues to capitalize on its growing channel presence to ship Portables geared toward a wide range of cost-conscious consumers. The company maintained its lead in Mini Notebook PCs while its early entry into Atom-based Notebooks should also pay dividends later in the year. The company saw a significant gain in the US market, likely benefiting from the troubles of Dell and Lenovo.

Lenovo: Its renewed focus on Notebooks and emerging regions produced positive growth following declines in the past two quarters. Solid growth was reported in Latin America and APeJ while yearly declines in mature regions slowed compared to 1Q09. Its home court advantage in APeJ also has led it to focus on a myriad of government stimulus programs, which could pay dividends while riding through the Commercial downturn.

Toshiba: It had a solid second quarter where it outgrew the market in most regions and moved up to the fourth spot in the US. Toshiba's Mini Notebook offering has helped it to weather the storm comparatively better than other Japanese OEMs and it was the only major Japanese OEM to have positive yearly growth in Japan.Table Notes:

* Some IDC estimates prior to financial earnings reports.
* Shipments include shipments to distribution channels or end users.
* PCs include Desktop and Portable PCs (including Mini Notebooks)
* PCs do not include x86 Servers or handhelds. Data for all vendors are reported for calendar periods.

Consumer portable PCs limit volume decline, but shipment value suffers

FRAMINGHAM, USA: Worldwide PC shipments fell 6.8 percent in the first quarter of 2009 (1Q09), about 1.4 percent better than expected but still the largest decrease since the third quarter of 2001, according to IDC's Worldwide Quarterly PC Tracker.

Although volume declined less than expected thanks to some positive activity in the latter part of the quarter, the Commercial sector and key macroeconomics indicators remain weak.

The growth of Mini Notebook PCs is playing a dramatic role in the market. Mini Notebook PC shipments of 5.7 million in 1Q09 were ahead of expectations, but contributed to a decline of 3.1 million traditional notebooks from a year ago.

The impact on shipment value was dramatic, with Mini Notebook PCs contributing $2.2 billion in the first quarter of 2009 while the value of traditional notebook shipments declined by US$8.4 billion from a year ago. Mini Notebook pricing is expected to rise with more robust models, and shipment growth is expected to slow with the release of low-cost, thin-and-light Intel CULV and AMD Congo-based systems this fall.

However, the growth of Mini Notebooks to 9.5 percent of total PC shipments (17.3 percent of Portables) in 2009 will help drive shipment value down by 17.7 percent even as volumes decline just 3.2 percent.

Mature markets saw growth drop significantly in the past two quarters, but are expected to stabilize and improve going forward. The United States and Western Europe outperformed forecasts as consumer demand was supported by strong ASP declines that were accelerated by growth in Mini Notebook PCs.

Although 1Q09 was promising, shipments in the United States are still expected to decline by just over 2 percent in 2009 and see less than 1 percent growth in 2010. Western Europe saw a limited impact in 4Q08, but saw growth disappear in the first quarter and is likely to see further contraction in 2Q09 before stabilizing –- putting 2009 growth slightly below zero while double-digit growth will not return until 2011.

Projections for Japan were lowered as 1Q09 activity missed expectations, though we continue to expect low-single digit growth in 2010-2011.

Continuing the trend from the fourth quarter of 2008, emerging markets continue to account for the most dramatic shipment declines. Lack of credit along with continued currency devaluation continued a cycle of shrinking resources for channel financing that severely affected Latin America and Central/Eastern Europe.

Canada, along with Latin America and CEMA combined are expecting 2009 to see a decline of more than 13 percent although the region will see double-digit growth in 2010 as it rebounds from 2009.

In contrast to other emerging regions, Asia/Pacific excluding Japan (APeJ) came in slightly above forecast as government spending funneled money to infrastructure improvements and vouchers to stimulate consumer spending. China in particular fared better than hoped. For the rest of 2009 PC growth should accelerate in APeJ, reaching near 12% for 2010, and leading other regions through the end of the forecast.

PC Shipments By Region And Form Factor, 2008-2013* Forecast data
Source: IDC Worldwide Quarterly PC Tracker, June 2009

“The economic crisis continues to dampen PC demand and force changes in the market,” said Loren Loverde, director of IDC’s Worldwide Quarterly PC Tracker. “Mature regions are navigating the changes better than emerging regions in the short-term as finances remain more liquid, but from 2010 forward emerging regions will have the advantage in both growth and volume. Meanwhile, the concentration of growth in the consumer segment and in evolving categories like Mini Notebooks is quickly raising the stakes of competition.”

"Despite a relatively slow first quarter, industry supply chain checks suggest that the worst is over and we are starting to be more optimistic about volume growth at the end of the year and especially into 2010," said Bob O'Donnell, IDC's vice president, Clients and Displays.

"New product introductions coming this fall, including low-cost, thin-and-light consumer portables, low-cost Intel Atom-based all-in-ones, and, of course, Windows 7, should provide a spark that helps to push market towards positive shipment growth over the next 12 months."

PC Shipment Growth By Region And Form Factor, 2008-2013* Forecast data
Source: IDC Worldwide Quarterly PC Tracker, June 2009

Network surveillance technologies take a bite out of crime… and inefficient business practices

FRAMINGHAM, USA: Rapid advancements in network surveillance technology are shifting the emphasis away from guns, guards, gates, and dogs and placing it on more sophisticated, scalable security solutions. According to new research from IDC, worldwide surveillance/monitoring camera shipments will grow from 9.3 million in 2007 to 26.5 million in 2013.

While some sectors – education, gaming, public safety, retail, and transportation –- have been eager to adopt network surveillance solutions, others have been more reluctant to integrate security functionality into their network infrastructure. However, advances in camera and access technologies, as well as reduced hardware price points, are converging to create a perfect surveillance storm.

"Market changes are causing a major shift in the way organizations protect their business assets," said Chris Chute, research manager, Worldwide Digital Imaging Solutions and Services at IDC. "Moving forward, security administrators will rely less on human observation to address their most critical security demands. The opportunity is tremendous for those who understand how to position themselves in this evolving space."

In addition to protecting sensitive resources and property, companies are beginning to recognize how surveillance data can be used to improve/streamline a growing number of business processes. Retail, transportation, and gaming verticals are successfully implementing network surveillance as a business enablement tool.

The retail industry has utilized video analytics to track customer flows through stores and used that information to adjust merchandise placement. The transportation industry can respond to traffic incidents in a more timely fashion, using the data to make fact-based decisions on future infrastructure initiatives. Beyond the critical security that surveillance offers the gaming industry, it also provides important business information about the games' popularity and ultimately its placement on the casino floor.

Additional findings from the study include the following:

* Captured and archived network surveillance content are expected to grow by 51.7 percent and 50.1 percent, respectively, in the next five years.

* Worldwide network surveillance camera shipments are expected to increase by an average of 45 percent yearly from 2009 to 2013.

* Network camera shipments will surpass those of analog cameras in 2012.

* The growth of deployed cameras and content will drive the physical security information management software market to over $5.3 billion in 2013.