Xmas PC sales slump: the proof

First decline

PC sales in the consumer sector fell 24 per cent in December compared to the previous year.

Retail and direct/mail companies shifted just over one million desktop PCs last month, with December representing the fifth consecutive month of figures lagging behind 1999.

Full year sales dropped 0.8 per cent on 1999 to 10.1 million, according to research by analysts at PC Data, which said 2000 was the first annual decline they had ever reported.

PC revenue for the Christmas month fell to $855 million, down nearly a third on the previous year. The price of desktops in the sector fell seven per cent to an average of $846.

December prices were down three per cent on November and nearly ten per cent on October.

"A spike occurred during the week before Christmas, but it fell short of the boost needed to lift overall sales during the holiday shopping season," said Stephen Baker, PC Data VP of technology products research and analysis.

He blamed several factors, including the success of ISP rebate programs in 1999, a slowing economic outlook, slightly higher prices in 2000, and a lack of consumers wanting to upgrade.

Around 2.5 million desktops were sold in the fourth quarter, 18 per cent down on the same period in 1999. Average selling prices fell to $872 from $878.

"Despite these poor PC results, the overall computer products business still looks like a good place to be. We anticipate that computer retailers will see a ten to 12 per cent increase in revenues for the fourth quarter, driven by the digital upgrade cycle as consumers shift purchases away from PCs and into the new 'digital toys'," said Baker

Handheld devices from vendors such as Palm sold like hotcakes - with sales more than doubling in November compared to 1999. Devices such as MP3 players, Web PC and digital cameras, and CD burners also showed healthy sales growth.

Industry heavyweights such as Compaq, Dell, Gateway, Intel and Apple have all complained that slowing computer demand may damage Q4 figures. ®

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