Business PC Buying Expected to Partially Offset Slower Consumer Sales in the Second Half of 2010, According to IDC

FRAMINGHAM, MA – September 2, 2010 – Despite posting impressive year-on-year growth of 20.9% during the second quarter of 2010 (2Q10), the global PC market began to reflect a more cautious outlook compared to earlier in the year. In the U.S., the consumer rally that has been crucial to the PC market recovery slowed, finally succumbing to a persistently bleak employment outlook. Slower second half growth was expected as part of the recovery cycle, however, and worldwide commercial activity remained encouraging, with a healthy number of large projects in most regions lifting Desktop PC volume over expectations. As a result of the economic jitters and adjusted segment performance, the outlook for full year 2010 PC shipments has been reduced from 19.8% to 17%, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker.

The onset of the recession at the end of 2008 continues to have a substantial effect on the seasonality of the market. Global PC shipment growth averaged over 14% for the six years preceding the recession. Then, from Q4 2008 through the first half of 2009, volume declined sharply year-on-year. This set the stage for a strong rebound in Q4 2009 (over 17% growth) and the first half of 2010, with a nearly 25% increase from the depths of the recession. IDC expected that the market could not maintain this pace and the 11.8% growth projection for the rest of the year fits with the slow and steady recovery. Another way to see the trend clearly is to look at compound annual growth over the past 2 years. The CAGR from 2008 to 2010 is 10.4%. This is very close to the 10.7% growth seen in 2H 2009, and 11.8% projected for 2H 2011, as well as slightly higher 11-13% growth projected for the next four years. We should not let the dramatic swings of first half year-on-year growth (-3.2% in 2009, and +23.5% in 2010) obscure the general recovery trend.

"Despite reducing growth projections for the year, the outlook for the PC market in the second half of 2010, as well as longer term, remains one of solid double-digit gains," said Loren Loverde, vice president IDC Worldwide Trackers "Strong demand, aggressive pricing, and active product development will continue to fuel solid growth through the next several years."

IDC has lowered both its Portable PC as well as Consumer PC growth throughout the forecast period. Mininotebook PCs (also known as netbooks) will remain a sizable part of the PC landscape, but growing saturation, competition from mainstream notebooks, and, to a lesser extent, emerging devices like the Apple iPad, are likely to further slow Mininotebook growth. Desktop PC volume has been revised upward, slightly helped by All-In-One PCs, but mainly reflecting commercial activity from small businesses up through enterprise replacements. This commercial revival should outpace consumer growth for much of 2011. Portable PCs are expected to maintain the dominant share of total shipments, capturing more than 70% share by 2014, but declining ASPs are expected to drive yearly revenue growth into the 3-5% range beyond 2010.

Emerging regions (including Asia/Pacific excluding Japan (APeJ), Latin America, Central Europe, the Middle East, and Africa) surpassed mature regions in PC shipments in 2Q10. The relatively low penetration and bourgeoning demand in emerging markets represents a key growth driver going forward, and will drive these regions to represent roughly 56% of total PC shipments by 2014.

"With dwindling government stimulus programs across many markets, and a relatively strong second half in 2009 as the backdrop, the rest of 2010 will present an even more competitive landscape," said Jay Chou, research analyst with IDC's Worldwide Quarterly PC Tracker. "Slower growth in the holiday season may drive further discounts to move inventory and motivate consumer purchases. The business PC market, which is driven by a need to upgrade older infrastructure, is expected to offer a relative respite from the slowing consumer growth, but PC vendors continue to face a very competitive and dynamic environment."

"After several years of carrying the load in terms of shipment growth for the PC industry, the U.S. consumer market is getting fatigued. Challenged with less discretionary income than in previous years, as well as a slew of new devices to divert their attention, fewer U.S. consumers are expected to update their PCs this holiday season," said Richard Shim, research director of IDC's Personal Computing program. "Fortunately, large businesses are expected to reinvest in their PCs over the next several quarters, helping to drive double digit shipment growth in the U.S. PC market this year."

PC Shipments by Region and Form Factor, 2009-2014

(Shipments in millions)

Region Form Factor 2009 2010* 2011* 2012* 2013* 2014*

USA Desktop PC 28.4 29.3 29.3 28.8 28.4 28.1

USA Portable PC 42.6 49.1 56.4 64.1 72.7 81.6

USA Total PC 71.0 78.4 85.7 92.9 101.1 109.6

International Desktop PC 107.8 118.8 124.8 127.3 128.2 128.3

International Portable PC 126.1 159.4 192.2 227.8 267.4 314.6

International Total PC 233.8 278.2 317.0 355.1 395.6 442.9

Worldwide Desktop PC 136.2 148.0 154.1 156.1 156.6 156.4

Worldwide Portable PC 168.7 208.5 248.6 291.9 340.1 396.1

Worldwide Total PC 304.9 356.6 402.7 448.0 496.7 552.5

* Forecast data

Source: IDC Worldwide Quarterly PC Tracker, August 2010

PC Shipment Growth by Region and Form Factor, 2009-2014

Region Form Factor 2009 2010* 2011* 2012* 2013* 2014*

USA Desktop PC -9.40 % 3.00 % 0.05 % -1.56 % -1.46 % -1.08 %

USA Portable PC 24.64 % 15.28 % 14.81 % 13.57 % 13.48 % 12.17 %

USA Total PC 8.36 % 10.37 % 9.30 % 8.40 % 8.84 % 8.45 %

International Desktop PC -9.54 % 10.22 % 5.09 % 2.00 % 0.67 % 0.07 %

International Portable PC 16.68 % 26.42 % 20.57 % 18.54 % 17.38 % 17.65 %

International Total PC 2.93 % 18.96 % 13.96 % 12.03 % 11.39 % 11.96 %

Worldwide Desktop PC -9.51% 8.71% 4.10% 1.33% 0.28% -0.14%

Worldwide Portable PC 18.60% 23.61% 19.21% 17.41% 16.52% 16.48%

Worldwide Total PC 4.15% 16.95% 12.94% 11.25% 10.86% 11.24%

* Forecast data

Source: IDC Worldwide Quarterly PC Tracker, August 2010

Taxonomy Note: PCs include Desktop, Notebook, Ultra Portable, and Mini Notebook PC, and do not include handhelds.

IDC's Worldwide Quarterly PC Tracker gathers PC market data in 80 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data. For more information, or to subscribe to the research, please contact Kathy Nagamine at 650-350-6423 or

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