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Gartner mages have spoken: 'D' is for Device, Decline and DOOM

Market slumping as strong dollar pushes up price ... not the only reason though

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It is just as well that fewer people now rely on PC sales to put food on the table, or they’d be reaching for the nearest begging bowl.

Amid declining revenue forecasts from component makers, a Euro market buried under a mountain of unsold stock, and a strong US dollar causing price hikes outside the States, Gartner has added to the woes.

The stroker of abaci predicts that end user spending on devices will shrink to $606bn in 2015, that is some 5.7 per cent fewer greenbacks than were flashed last year, and the first shrinkage since 2010.

Shipments are set to rise 1.5 per cent to 2.5bn units but this is only due to continued demand for one half of the device family; smartphones, and to a far lesser degree, ultra mobile PCs.

“Our forecast for unit shipment growth for all devices in 2015 has dropped 1.3 percentage points from last quarter’s estimate,” said research director Ranjit Atwal.

“This was partly due to a continued slowdown in PC purchase in Western Europe, Russia, and Japan in particular, largely due to price increases resulting from local currency devaluation against the dollar.”

The problem child is the traditional PC – some 251 million desktops and notebooks are forecast to find a home this year, down from 277 million in 2014. Ultra mobiles are forecast to climb to 49 million from 37 million. This equates to a total PC market decline of 4.5 per cent to 300 million units.

As El Chan exclusively revealed recently, distributors in the UK and across mainland Europe are sitting on high levels of inventory, particularly retail boxes and expecting higher sales than materialised.

Gartner estimates PC makers are turning down the supply chain taps to reduce the stock profile by five per cent in a bid to minimise their pricing exposure in the channel, something that has caught out the likes of Acer.

Lenovo is one of the major culprits, we are told, though it and Euro market leader HP are addressing the situation.

Atwal said the end of the XP migration negatively impacted sales comparisons but the great hit was appreciation of the US dollar. So far in Europe, PC prices have risen by around 10-15 per cent.

“We do not expect the global PC market to recover until 2016,” he said, “the release of Windows 10 on 29 July will contribute to a slowing professional demand for mobile PCs and ultra mobiles in 2015, as lifetimes extend by three months”.

Only last night, AMD warned investors that Q2 revenue will be lower than it previously guided due to weaker PC demand. Quite why anyone in the market is surprised by this is unclear; retail PC sales were sluggish since Q3 of 2010, with only brief respite last year.

AMD is facing its own set of problems, but Intel too is also anticipated to make similar moves. BluFin Research Partners yesterday put out a research note saying Intel’s production output and Q3 outlook are “significantly weaker than Street consensus”. And it’s late move to adjust inventory will result in yet more unwanted chips.

Tablet and clamshells that helped to drive growth in recent years ran out of steam in 2014. Gartner said a lack of new buyers, extended life cycles and little innovation do not bode well for tab sales in 2015.

The beanie forecast unit sales of slabs and clamshells of 214 million this year, down 5.3 per cent year-on-year.

The mobile phone segment shipped 1.87 billion devices last year and will reach 1.94 billion this, if Gartner’s mystics are reading the signs correctly. This represents slowing growth of 3.3 per cent – still, you got to take it where you can get it, and not many people will be getting it this year. ®

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