IDC Lowers PC Market Forecast as Business and Consumer Demand Remains Weak

FRAMINGHAM, MA – SEPTEMBER 9, 2002 – IDC has lowered its PC market forecasts for 2002 and 2003 to reflect weakening demand for PCs from both consumer and business users. Total worldwide PC shipments are now expected to reach 135.5 million in 2002 on growth of 1.1%, with growth of 8.4% projected for 2003. The numbers were reduced from the June forecast for growth of 4.7% in 2002 and 11.1% in 2003.


The public sector and small-business segments continue to spend for the moment but the return of investment by medium and large-business has been very slow, particularly in the U.S. and Europe. Consumer demand, which accounts for roughly a third of PC shipments, also remains weak.

"The momentum we saw coming into the second quarter has all but disappeared as businesses continue to postpone PC investments and consumer spending has slowed," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "Growth in consumer spending could make a big difference in the rest the year, but current signs point to cautious buyers and slow growth. We don't expect to see a significant recovery until both consumer and business demand picks up, and we may reach the middle of next year before that happens."

"The higher cost of capital brought about by the continued decline of the stock market has sustained a note of caution in U.S. corporate IT spending," said Roger Kay, director of Client Computing at IDC. "Despite fluctuations in consumer confidence, the employment picture, which has remained depressed, is dampening consumer PC spending. Saturation is also increasingly a factor, as the mature U.S. market swings over more fully to a replacement model. To remain viable, vendors will have to adapt their distribution strategies to these new realities."

Regional Outlook:

* United States – Business demand improved but remained negative in the

second quarter indicating that significant IT investments will continue

to be postponed until we see stronger profits and a more robust stock

market. The consumer market is expected to show seasonal increases in

the second half of the year, although growth will be less than

previously anticipated.

* Western Europe – The market continued to suffer from slow business and

consumer demand in the second quarter 2002. Although a gradual recovery

is expected in the corporate space towards the end of the year, the

prospects of a major rebound are limited.

* Japan – The Japanese market was close to expectations despite

distractions from World Cup Soccer and short-term price increases.

Nevertheless, the market remains weak, and problems in the banking

sector threaten to further disrupt the market. If the economy and

banking sector hold up, we should start to see positive shipment growth

in 2003.

* Asia/Pacific – Most countries have moved back into growth mode following

a quarter or more of declines. Although a few markets remain depressed,

a return to growth in most countries, and continuing growth in larger

markets such as China, Australia, and India will keep regional growth

above 10% for 2002.

U.S. and Worldwide Unit PC Shipments and Growth, 1999-2003

Region 1999 2000 2001 2002 2003

USA Units (M)

Consumer 17.7 19.3 15.5 15.7 15.9

Commercial 30.9 32.7 30.5 30.6 32.3

Total 48.6 52.0 46.1 46.3 48.2

Worldwide Units (M)

Consumer 41.4 52.4 47.2 47.6 51.0

Commercial 79.2 87.5 86.9 87.9 96.0

Total 120.6 139.9 134.1 135.5 147.0

USA Growth (%)

Consumer 41.0% 9.2% -19.6% 1.2% 1.2%

Commercial 13.0% 5.6% -6.6% 0.1% 5.7%

Total 21.8% 6.9% -11.4% 0.5% 4.2%

Worldwide Growth (%)

Consumer 47.2% 26.6% -9.8% 0.9% 7.1%

Commercial 14.4% 10.5% -0.8% 1.2% 9.2%