Long-Term PC Outlook Improves, Even As Q2 Growth Dips Below 10%, According to IDC

FRAMINGHAM, MA – SEPTEMBER 14, 2006 – The worldwide PC market continued to expand at a healthy pace in the second quarter of 2006, although growth was slower than in recent quarters, according to IDC's Worldwide Quarterly PC Tracker. Total PC shipments exceeded 52 million units and growth was 9.8% for the quarter, 0.6% behind expectations. Despite the slower second quarter, IDC expects the second half of 2006 to be strong enough to maintain double-digit growth for the year.

"Mature regions, like the United States, Western Europe, and Japan, are exhibiting more conservative growth trends, while developing regions are not only growing faster, but exceeding expectations," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "Although this is an important development trend, it's also the case that the bulk of portable PC adoption – the leading market driver – remains concentrated in the more mature markets. As a result, there's plenty of opportunity for PC companies to grow, but they need to adequately target the growth segments in each region."

PC shipments in Western Europe and Japan were considerably slower than expected in the second quarter, largely due to short term factors such as inventory reduction and the FIFA World Cup. Growth in Asia/Pacific excluding Japan and Rest of World (including Latin America, Canada, Central and Eastern Europe, and Middle East and Africa) was down slightly from the prior quarter, but still ahead of expectations while growth in the United States rose slightly from the first quarter.

In light of the 2Q06 results, IDC's growth projections for 2006 were lowered slightly from the June forecast. However, volume for 2007 remains unchanged and future years have been bolstered by the strong outlook in emerging markets as well as further growth potential driven by new product designs and digital convergence.

"We believe consumer notebooks will continue to drive strong overall PC sales through the rest of this year despite the presence of many potential competitors for discretionary income this holiday season, such as flat-panel TVs," said Bob O'Donnell, vice president Clients and Displays. "Looking forward, we expect desktop shipments will begin to stabilize, particularly in the enterprise segment. However, consumer notebook adoption will fuel industry growth and move us closer to the day when notebooks will out-ship desktop PCs."

U.S. and Worldwide PC Shipments and Growth, 2004-2008

Region 2004 2005 2006* 2007* 2008*

USA Units (M)

Consumer 21.8 23.6 25.6 28.0 30.5

Commercial 36.5 40.3 42.2 45.9 51.5

Total 58.3 63.9 67.8 73.9 82.0

Worldwide Units (M)

Consumer 64.9 78.6 88.5 100.1 111.7

Commercial 114.4 129.3 141.3 157.2 176.1

Total 179.2 207.8 229.7 257.4 287.8

USA Growth (%)

Consumer 8.3% 8.5% 9.2% 9.1%

Commercial 10.4% 4.9% 8.8% 12.1%

Total 9.6% 6.2% 9.0% 10.9%

Worldwide Growth (%)

Consumer 21.1% 12.6% 13.2% 11.5%

Commercial 13.0% 9.3% 11.3% 12.0%

Total 16.0% 10.5% 12.0% 11.8%

*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, June 2006

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.

For more information, or to subscribe to the research, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

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