Not the season to be jolly for PC vendors
The Ghost of Christmas Past
PC sales are seasonal, with the second half of the year doing better than the first. The last quarter is when the hay is made, for that's when consumers of the Western world and Japan make their big pre-Christmas purchases, and corporations which operate Jan-Dec financial years make sure they get rid of any surplus in their IT budgets.
Or that's the way it used to be. A couple of years ago, the big holiday season PC buying surge simply didn't happen in the US, whose consumers are the engine of the world's economy. This confirmed 2000 as an annus horribilis for the PC industry.
It didn't get any better in 2001, although there was an element of return of the US holiday season purchase. In January this year we reported a "surge in consumer PC sales in the US in December (2001). Fuelled by low-interest deals, US PC sales through the retail sector jumped 101 per cent each week after Thanksgiving, according to investment bank Salomon Smith Barney. This compares with rises of 40-60 per cent a week in the run up to Christmas 2000, a truly terrible period for the US PC industry". US PC sales in December 2000, were 24 per cent down on the previous year.
So what is it to be this year - gruel, or gravy? Unfortunately for the PC vendors and their component suppliers, this holiday season is to offer slim pickings for the third year running. Gartner Dataquest does not expect a big boost this year, with "the gloomy economic situation ... likely to affect US and Japan holiday season purchases". Worldwide PC shipments should hit 35.1 million units in Q4, 1.5 per cent up on the same period on 2001. At least it's not as bad as 2000.
Other electronics devices - DVD players, games consoles, and digital cameras - are competing for limited funds. And Gartner Dataquest complains of a "lack of compelling technologies" that will inspire the punters to buy a new PC. Of course, there is no magic bullet. But broadband access, file-swapping pirated games, music and films, editing pics from digital cameras, funky LCD screen, are all step-reasons that will encourage supposedly satiated consumers to upgrade. It will just take a little longer, that's all.
In the meantime, the surge that will never be is good news for consumers who are thinking of upgrading their PCs this year. If vendors have got their forecasts wrong, then that means fire sales before Christmas, rather than January. If you really must buy a PC before Christmas, try and hold out for as late in December as possible.
On a side note, what is one to make of Gartner's bee in bonnet over the rewriteable DVD format wars? "Rewriteable DVD prices are anticipated to fall, but the ongoing battles between rewriteable DVD drive formats (DVD-RW or DVD+RW) continue. Uncertainty over the outcome of this format war is at least partially likely to undermine the effect of lower drive prices."
We have never heard anyone say they are delaying buying a new PC because of the DVD format battles. Have we missed something? ®