PC Shipments on Bumpy Ride
George Shiffler, principal analyst for Gartner's computing platforms and economics research, said that Gartner predicts shipments will decline 9 percent from the first quarter of 2003, but will be up 6.4 percent from the year-ago quarter.
"That's standard seasonally," Shiffler said of the decline.
Gartner is also predicting an 8.3 percent sequential decline in revenue, with the industry pulling in $38.3 billion on worldwide shipments of 30.7 million. Shiffler noted, "We saw pretty aggressive price cutting for the first quarter. The question is: can the companies afford to do it?"
Still, he added that revenues will be up 2.6 percent from second quarter 2002. The firm anticipates full 2003 PC shipments to reach 136.9 million units, a 6.6 percent sequential increase from 2002, with revenue on pace to total $170.6 billion, up 3.3 percent from the previous year.
In any case, Shiffler said it is still early to predict a recovery in the market, with much depending on a global economic recovery.
"The good news for the global economy is that the U.S.-led war against Saddam concluded more quickly and with fewer damaging economic consequences than many expected," he said. "The bad news is that the global economy does not appear to be experiencing the uplift that so many anticipated once the war was concluded, at least not yet."
He added, "In the United States, prospects for a recovery remain mixed and economists are increasingly split over whether 2003 GDP growth will prove better or worse than 2002. The outlook for the general economic recovery would be greatly enhanced were Europe able to engineer some autonomous growth, but the prospects for this remain poor because of weak confidence, the appreciating Euro, and overly tight macroeconomics."
Meanwhile, in Asia, severe acute respiratory syndrome (SARS) looms large. So far, Shiffler said that the economic effects of SARS seem to be localized in Asia, which has been hardest hit by the disease.
"The SARS outbreak in Asia is already having an appreciable impact on select economies in the region, and there is a rising danger that the outbreak could significantly impact the entire region if intra-regional trade is severely disrupted," he said.
As a strong growth market for PCs (Asia accounted for 5.4 million unit shipments in the first quarter), trade disruptions could hurt the PC industry. Asia also accounts for much of the memory and chip fabrication facilities that feed the PC industry, but Shiffler said that is less of a problem because the industry is not currently capacity constrained.
"I think the bottom line is we're not really capacity constrained," he said. "If we were in a condition where markets were tight, it would be an issue. We don't foresee an issue at the moment. We think there will be a slowdown in sales in Asia. We don't think it's significant at the moment."
However, on the favorable side, Shiffler noted that many of the machines purchased in 1999 as a result of the Y2K scare are coming due for replacement. He said that fact makes Gartner fairly optimistic for 2004. Longer-term though, he said the PC industry may be forced to come to terms with market saturation -- at least in the U.S. and western Europe (which account for 35 percent and 25 percent of the market respectively). Instead, PC makers will have to take comfort in the slow but steady business of replacing machines in their installed base.
"We think after next year we will not see double digit growth in the U.S. again," he said.