September 8, 2011 1:17 pm

PC industry faces sales slowdown

The global forecast for personal computer shipments has been cut dramatically by Gartner, the research group, due to economic instability in western Europe and the US and a consumer shift to tablet devices such as the iPad.

Gartner lowered its growth guidance for the global PC market this year to 3.8 per cent from its earlier forecast of 9.3 per cent, and warned that 2012 would also see a slower start to sales. PC sales for 2011 are expected to be 352m – nearly 54m units less than it forecast just nine months ago, in December 2010. It was the second time this year Gartner had lowered its guidance.

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“The expectation originally was that the economy would stabilise in the second half and consumers who hadn’t upgraded their PCs for some time would be attracted back to the market. But that hasn’t happened and in fact PCs have been pushed even further down the buying criteria,” said Ranjit Atwal, research director at Gartner.

Second-quarter PC sales were much lower than expected in the US and early indications are that back-to-school spending has been disappointing. Many consumers are spending money on smartphones and tablet computers, while holding onto their desktop PC or laptop for a few more years.

In contrast to slowing PC sales, Gartner forecast earlier this year that global smartphone sales would grow 57.7 per cent to 468m in 2011, while sales of tablets are expected to more than treble to close to 70m units this year.

“It is only towards the back end of 2012 that we could see a boost for the [PC] industry, if companies like Microsoft and Intel begin providing thin and light laptops at cheaper prices. But if that doesn’t happen, we will have to cut numbers again,” Mr Atwal warned.

HP’s recent decision to spin off its PC business highlighted the difficulties the industry is facing. In August, Taiwan’s Acer, the fourth-largest PC manufacturer by shipments, projected a loss for 2011, and Dell cut its revenue forecast for the year.

“The business model of PC vendors has to change. It used to be about low prices, high volumes and low margins. But the model is breaking down because they no longer have the high volumes,” Mr Atwal said.

Mr Atwal said computer companies would have to evolve to producing more varied types of devices, from phones and tablets to televisions.

Apple has shown the way but we will have to see if other companies can follow,” he said.

Sales in emerging markets such as China, Russia and Brazil are currently underpinning the PC industry, while sales decline in western Europe and the US.

However, Gartner said that if buying behaviour in those markets changed – perhaps with the introduction of cheaper tablets – the PC market would be facing further stagnation.

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