vnunet.com analysis: Double-digit PC sales growth for 2006

The appeal of low-cost and portable PCs will continue to drive double-digit growth in the personal computer market in 2006, despite fewer PC replacements and slower economic growth, according to the latest forecast from IDC's Worldwide Quarterly PC Tracker.

Following third-quarter growth of more than 17 per cent year on year, worldwide PC shipments are now expected to grow by nearly 15 per cent in the fourth quarter, boosting annual growth a half point ahead of the 15.3 per cent rate in 2004 to 15.8 per cent in 2005 and raising the outlook for growth in 2006 to 10.5 per cent.

Although growth is still expected to slow in the months ahead, the recent strength of the overall market, particularly in portable PC adoption, has contributed to rising expectations in all major regions except Japan.

"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."

The latest forecast update increases IDC's predicted market growth from earlier projections of 12.6 per cent in the fourth quarter of 2005, 14.1 per cent for full year 2005, and 9.1 per cent in 2006.

The updated figures make 2006 the fourth consecutive year of double-digit shipment growth and raises the four-year compound annual growth rate for 2005-2009 to 9.4 per cent.

IDC expects total shipments to reach nearly 300 million units annually in 2009. Shipment value is expected to grow by 3.5 per cent in 2006 with a CAGR of 3.6 per cent from 2005-2009, increasing the value of shipments to more than $250bn annually in 2009.

"The outlook in the US remains fairly strong despite the impact of hurricanes Katrina Rita, and Wilma and rising fuel costs on consumer confidence," said Bob O'Donnell, vice president clients and displays at IDC.

"Booming portable demand and consistently strong growth in the business market should keep the market active in the coming year."

From a regional perspective IDC noted that the US has enjoyed a strong third quarter and resilient demand in both consumer and commercial segments. Portable PC demand in the region is expected to be the driving force in the market, pushing portables to over 50 per cent of client PC shipments by 2008.

For Western Europe IDC's data suggests "robust growth" in consumer portables supported by persistent gains in the business segments. However, the analyst noted that GDP projections for Western Europe have been downgraded slightly while the euro has weakened against the dollar.

The softening economic environment and an anticipated decline in PC replacements reinforce IDC's expectation of slowing growth in 2006.