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Laptops and developing countries drive strong PC growth (maybe)

Gartner reads the entrails

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With a fair wind and a favourable tide, PC shipments should rise 11 per cent to 293 million units this year (2007: 264 million units), so says Gartner. The analyst shop thinks the PC market is "fundamentally in good shape", citing strong laptop sales, more demand in poorer countries, and some significant desktop replacements in the offing. But - and it is a big 'But' - sales could fall into single digits - "if global economic headwinds strengthen".

According to George Shiffler, research director, the Pooh Traps the industry could fall into are a "deepening US recession, the rising possibility of a sharp slowdown in China's economy following the Beijing Olympics, and the elevated price of oil".

Sounds all too plausible, so who can blame Gartner for hedging its bets?

Let's turn to Shiffler, in Cassandra-lite mode:

Slowing GDP (gross domestic product) growth can and does affect PC shipments through its impact on consumer incomes and business profits. Although the impact has probably softened over time as PC prices have fallen and PCs have become more indispensable to work and play, PCs are still far from being completely recession-proof. A deeper and more extended global slowdown emanating from the U.S. and China would slow PC unit growth even more by sapping mobile PC demand, slowing emerging-market growth, and delaying replacement activity.

Shiffler puts on his Pollyanna dress for this:

Rapid economic growth [in emerging markets] is not only stimulating PC demand among business, governments and educational institutions, but also generating new demand among the ever-growing numbers of increasingly affluent consumers.

And this:

Desk-based PCs experienced their last major replacement cycle from 2004 to 2005. Gartner's replacement model indicates that desk-based PCs are on track to experience another, albeit substantially more modest replacement cycle, from late 2008 to early 2010. In addition, mobile PCs remain on track to experience a steady increase in replacement activity through late 2009. Replacements account for 60 per cent of PC shipments worldwide and nearly 80 per cent of US PC shipments, so growing replacement activity will provide a helpful boost to PC growth.

So there you have it: PC shipments will grow 11 per cent in 2008. Or they won't. Average selling prices will fall, because they always do. But by how much? Gartner has a number in mind perhaps, but that's for clients. The rest of us must wait for the '08 quarterly sales numbers. ®

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