Falling prices open new PC markets

Falling personal computer prices attracted new buyers in Asia and Latin America and prompted an unexpected surge in worldwide PC shipments in the second quarter, a trend that could contribute to sustained growth, market researcher IDC said on Monday.

IDC attributed the greater-than-expected 16.6 per cent rise in global PC shipments to strong demand for laptop computers and falling prices for desktop units. IDC in May said shipments would grow 12.3 per cent in the quarter.

Analysts had long believed that the current growth cycle was largely due to current PC owners upgrading their old computersor switching to portable PCs.

But IDC and Gartner, a rival research group, said better-than-expected second-quarter shipments pointed to a surge in new users in various emerging markets.

“Falling prices are a factor in opening up new markets and attracting new buyers,” said Charles Smulders, analyst at Gartner.

Industry observers had believed recent gains in PC shipments would ease once owners had upgraded their machines. But Loren Loverde, analyst at IDC, said the growth in new users had the “potential to provide some longer term growth”.

However, Gartner cautioned that growth in emerging markets in Asia, Latin America and eastern Europe while better than expected would not be enough to offset an expected slowdown in the replacement PC market, which accounted for an estimated 65-70 per cent of all PC shipments.

Mr Loverde said PC shipments in Asia, not including Japan, had hovered in the 13-14 per cent growth range in recent years. However, early estimates suggest PC shipments in Asia grew17-19 per cent in the most recent quarter.

Gartner said PC shipments grew 17 per cent in Asia,25 per cent in Latin America and almost 19 per cent in Europe, the Middle East and Africa.

IDC cautioned it would not change its long-term forecast until it was certain thatsecond-quarter growth could be sustained.

IDC's current forecast calls for PC shipments to grow 11.4 per cent in 2005, down from 15.2 per centlast year.

IDC also forecast long-term growth of 8-9 per cent annually from 2006-09.

The two research firms also reported that Dell continued to tighten its grip on the sector's top spot as it increased its market share lead over rival Hewlett-Packard.

Dell's market share increased to 19.3 per centin the second quarter, up from 18.2 per cent in the same period last year,said IDC.

Meanwhile, HP's market share remained stable at 15.6 per cent.