IDC Forecasts Continued Double-Digit PC Market Growth in 2006

FRAMINGHAM, MA – December 20, 2005 – The appeal of low-cost and portable PCs will continue to drive double-digit growth of 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% year on year, worldwide PC shipments are now expected to grow by nearly 15% in the fourth quarter, boosting annual growth a half point ahead of the 15.3% rate in 2004 to 15.8% in 2005 and raising the outlook for growth in 2006 to 10.5%. Although growth is still expected to slow in the months ahead, the recent strength of the overall market, and 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 boosts growth from earlier projections of 12.6% in the fourth quarter of 2005, 14.1% for full year 2005, and 9.1% 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 (CAGR) for 2005-2009 to 9.4%. Total shipments are expected to reach nearly 300 million units annually in 2009. Shipment value is expected to grow by 3.5% in 2006 with a CAGR of 3.6% from 2005-2009, increasing the value of shipments to more than $250 billion annually in 2009.

"The outlook in the United States 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."

Regional Outlook:

— United States – The strong third quarter and resilient demand in both consumer and commercial segments has prompted a slight increase in growth expectations for 2006. Portable PC demand is expected to be the driving force in the market, pushing portables to over 50% of Client PC shipments by 2008.

— Western Europe – Robust growth in consumer portables supported by persistent gains in the business segments reflect continued strong demand in Western Europe. However, 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 our expectation of slowing growth in 2006.

— Japan – Overall, third quarter growth was remarkably strong, but concerns about the durability of consumer demand and the pressure on commercial spending with rising oil prices and a soft economy warrant a cautious outlook for Japan. Unlike other regions, portables growth is expected to be just a point or two ahead of desktop growth due to already high penetration.

— Asia/Pacific – Despite the potential for some disruption from factors such as rising oil prices, a slowing Chinese economy or currency revaluation, bird flu, or other factors, IDC is assuming "business as usual" with little or no impact to the PC market. Overall economic growth and remains quite strong as does demand for PCs.

U.S. and Worldwide PC Shipments and Growth, 2002-2006

Region 2002 2003 2004 2005(a) 2006(a)

USA Units (M)

Consumer 17.1 20.0 21.8 23.6 25.6

Commercial 30.5 32.7 36.5 40.6 43.8

Total 47.6 52.7 58.3 64.2 69.5

Worldwide Units (M)

Consumer 49.9 56.6 64.3 77.5 86.0

Commercial 88.8 99.0 115.1 130.2 143.5

Total 138.7 155.6 179.4 207.7 229.5

USA Growth (%)

Consumer 17.3% 8.8% 8.2% 8.7%

Commercial 7.2% 11.7% 11.2% 8.1%

Total 10.8% 10.6% 10.1% 8.3%

Worldwide Growth (%)

Consumer 13.4% 13.6% 20.5% 11.0%

Commercial 11.4% 16.3% 1310.0% 10.2%

Total 12.1% 15.3% 15.8% 10.5%

(a) Forecast data

(Shipments are in millions of units)

PCs include Desktop, Notebook, Ultra Portable, and x86 Server and do not include handhelds.

Source: IDC Worldwide Quarterly PC Tracker, November 2005

IDC's Worldwide Quarterly PC Tracker gathers PC market data in 55 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.

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