Laptops to drive PC market forward in 2006

Unit growth strong, sales less so

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Low-cost and portable PCs will continue to fuel the PC market in 2006, despite economic slowdown and lower replacement activity.

So says the latest research from IDC, which indicated that growth in the market, although slower, will stay in double digits in 2006, reaching 10.5 per cent. IDC cited the strength of the market, combined with the number of people turning to portable PCs, as a driving force behind the prediction. Moving back to the fourth quarter of 2005, IDC has estimated growth of almost 15 per cent, which will boost the annual growth rate for this year to 15.8 per cent, half a point more than 2004.

The newest predictions from IDC mean that the market will experience double-digit growth for the fourth consecutive year, and will raise the four-year compound annual growth rate (CAGR) for 2005 to 2009 to 9.4 per cent.

IDC is expecting total shipments to reach almost 300 million units annually in 2009, with shipment value predicted to expand by 3.5 percent in 2006, with a CAGR of 3.6 percent from 2005-2009.

In regional markets, the predictions vary. Despite robust growth in previous quarters, in Western Europe, a weakening euro and downgraded GDP projections have led to expectations that growth will slow in 2006. Japan is also feeling the economic bite, as high oil prices and concerns about the durability of consumer demand have generated a cautious outlook The same concerns are not evident in the Asia/Pacific market, where despite the potential for some disruption from factors such as rising oil prices, a slowing Chinese economy and bird flu, IDC is expecting little or no impact on the PC market. According to the research firm, it is "business as usual" with strong demand in evidence.

Meanwhile, following a strong performance in the third quarter, growth expectations in the US for 2006 have increased slightly, with portable PCs once again the driving force in the market. The devices are expected to account for more than half of client PC shipments by 2008.

"Following the shocks of 2001 and 2002 many people were impressed with the strength of the market in 2004 but cautious about the foundation and longevity of this growth," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "The fact that solid double-digit growth has continued through 2005 shows that the market recovery did not peak in 2004 as many expected but is still ongoing. The market may slow in 2006, but persistent growth over the past several years shows the appeal of low-cost and portable systems and the potential for both a longer recovery and a higher rate of long-term growth."

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