Out-Law News 1 min. read
01 Dec 2004, 12:00 am
While the market has registered double-digit shipment growth the past few years, tougher times lie ahead, according to the US research firm.
PC unit growth is forecast to average 5.7% annually from 2006 through 2008, half the 11.3% average of 2003 through 2005. PC revenue growth will average 2% annually from 2006 through 2008, less than half the 4.7% average of 2003 through 2005. Emerging markets will account for more than 60% of PC market growth from 2006 through 2008.
"With PC replacements still in full swing, 2005 should be a reasonably strong year for PC vendors," said Leslie Fiering, research vice president for Gartner's Client Platforms group. "However, the end of the replacement cycle is likely to strain viability for even the largest PC vendors in 2006 and beyond."
Currently, the top 10 worldwide PC vendors, by unit shipment, are: Dell, HP, IBM, Fujitsu/Fujitsu Siemens, Toshiba, Acer, NEC, Legend, Gateway and Apple Computer. Of the top 10 worldwide vendors, only Dell has consistently been profitable in the past several years.
According to Gartner, the PC divisions of HP and IBM are vulnerable to being spun off if their drag on margins and profitability are deemed too great by their parent companies.
PC price competition will intensify as vendors struggle to maintain growth in a competitive market environment characterised by weak replacement activity and the increasing significance of emerging markets.
"Global vendors will be forced to continue maximising supply chain efficiencies and, finally, abandon any efforts to differentiate other than on price and service levels," Ms Fiering said. "Vendors that have yet to do so may attempt to diversify into related markets pursuits, such as consumer electronics, to bolster margins. Others may attempt mergers with rivals to improve margins through economies of scale."
She added, "Exiting the market may be the only logical choice for global vendors bleeding profits and struggling for share."
Emerging markets
The growing prominence of emerging markets could open opportunities for local vendors in those regions to pursue global markets. Particularly in Asia/Pacific, leading local vendors, such as China's Lenovo, appear well positioned to leverage their strong local-market standing and low-cost operating models into a global presence.
"Local PC vendors in emerging markets should consider acquiring local rivals as a means to consolidate home market position and develop the scale economies required to springboard into a global presence," Ms Fiering said.
Gartner analysts said customers will be able to exploit the approaching buyers' market to pressure vendors on price and other incentives. However, customers also must consider the vendor's commitment to the PC market, as well as the vendor's "staying power" when selecting a manufacturer.