Outlook for PC Market Growth Weakens with Declines in Public Sector Spending, According to IDC

FRAMINGHAM, MA – MARCH 14, 2003 – Worldwide PC shipments reached 38.4 million units in the fourth quarter of 2002 with a value of $46.9 billion. Year-on-year shipment growth of 3.7% was within 1% of forecast, reflecting moderate consumer demand and continued caution on the part of businesses. Although growth was slightly slower than in the third quarter, total shipments continued a gradual recovery. For all of 2002, total shipments approached 136.2 million, growing 1.4%. Shipment growth is expected to rise to 6.9% in 2003. Despite the improvement in volume, shipment value declined by 9.8% in 2002 and is projected to decline by 1.8% in 2003.


"In many ways the PC market is performing as expected," said Loren Loverde, director of IDC’s Worldwide Quarterly PC Tracker. “We have moderate consumer growth, incremental technology improvements, a cautious business sector, and persistent uncertainty over the economy, Iraq, and North Korea. What's new is that public sector spending on PCs is slowing. The decline in government and education spending is not unexpected, but it is accelerating, and the impact is showing on PC demand."

“The launch of new form factors, such as the media PCs and tablets, has added some zest to the PC market," said Roger Kay, director of Client Computing at IDC. "However, volumes of these systems still lag their buzz, and technology refresh will not be sufficient to drive significant shipments until the second half of the year, given economic and political uncertainties. Further out, we expect the impact of these new technologies to be more substantial.”

Regional Outlook:

United States – While consumer spending remains strong, and business spending improves incrementally, public spending appears newly vulnerable to declining budgets. For most of 2002 the public sector avoided cuts in PC spending because of the priority of IT investments in education and government. However, the severity of government budget problems and poor fourth quarter performance suggests that these problems will constrain the segment significantly in 2003.

Western Europe – Slow demand in Europe was one of the surprises in the fourth quarter of 2002. Although consumer growth remained positive, leading the market, business and public sectordemand missed expectations. Commercial investments continue to be postponed in light of weak economic conditions and political uncertainty.

Japan – In contrast to other regions, strong business and public sector demand helped offset a weak consumer market. The commercial market strength is unusual in Japan where consumer spending typically leads a recovery. In 2003 we expect consumer spending will catch up to the commercial sector and lead growth by the end of the year. Total shipments are expected to grow by 2.9% in 2003 following 2 years of declines.

Asia/Pacific – A/P (except Japan) followed the trend of declining public sector spending, although business shipments continued to accelerate with growth rising above 22%. The market is expected to slow in the first half of 2003 as growth in these two segments moderates but will accelerate again in the second half with a strengthening global economy.

U.S. and Worldwide PC Shipments and Growth, 2000-2004

Region 2000 2001 2002 2003* 2004*

USA Units (M) 2000 2001 2002 2003* 2004*

Consumer 19.3 15.5 16.8 18.8 20.7

Commercial 32.7 30.5 30.7 31.6 34.8

Total 52.0 46.1 47.5 50.3 55.5

Worldwide Units (M)

Consumer 52.4 47.2 48.3 52.1 57.5

Commercial 87.5 87.0 87.8 93.5 103.6

Total 140.0 134.2 136.2 145.6 161.1

USA Growth (%)

Consumer -19.6% 8.4% 11.3% 10.2%

Commercial -6.6% 0.5% 2.9% 10.2%

Total -11.4% 3.2% 5.9% 10.2%

Worldwide Growth (%)

Consumer -10.0% 2.4% 7.8% 10.2%

Commercial -0.6% 0.9% 6.5% 10.8%

Total -4.1% 1.4% 6.9% 10.6%

*Forecast data

(Shipments are in millions of units)

Source: IDC, March 2003

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 650-962-6423 or knagamine@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC’s customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world’s leading IT media, research, and exposition company.


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