PC Market Expected to Grow by 10% in 2005, According to IDC

FRAMINGHAM, MA – December 8, 2004 – Strong third quarter results and ongoing commercial activity reinforce expectations for market growth in 2005, according to IDC's Worldwide Quarterly PC Tracker. While growth in worldwide consumer PC shipments slipped to less than 8% in the third quarter of 2004 from a peak of over 25% a year ago, growth in commercial shipments of 15.9% was down only one percent from a four and one half year high of 16.9% in the first half of 2004, and was up from 13.5% a year ago. Commercial growth is expected to slow in 2005 as the recent recovery matures, but should remain at a relatively robust 11.3% vs. projected consumer growth of only 8%. Total shipments are expected to reach 195.1 million in 2005 on growth of 10.1%, with total shipment value growing by 3.9% to $201 billion.

"We've expected the market to slow from peak recovery in 2004 since mid-2001," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "However, despite the relatively weak consumer market, commercial and portable demand continue to drive growth."

"The continuing market growth provides an excellent environment for Lenovo's acquisition of IBM's PC division," added Alan Promisel, Mobile Computing analyst at IDC. "Lenovo gains the global reach and scale to compete internationally while strengthening its position in relatively high growth commercial and portable markets."

Regional Outlook:

— United States – Continued commercial growth will be a key driver of the U.S. market as companies wrap up replacements. Commercial growth of 11.4% in 2005 is expected to be down only slightly from the prior year while the consumer growth outlook remains soft at only 5.1%.

— Western Europe – Overall growth in Western Europe is expected to slow considerably from over 17% in 2004 to less than 10% in 2005. The change reflects peak recovery in the business segment, particularly large business, along with continued strength in the consumer and public sectors. With more difficult year-on-year comparisons and already aggressive pricing, both desktop and portable PC growth is expected to slow.

— Japan – Japan's struggling consumer segment should finally return to positive growth in 2005. Nevertheless, slowing commercial growth and already high portable penetration will limit overall market growth.

— Asia/Pacific – While maintaining double-digit growth and still growing faster than more mature regions, rising interest rates and slower growth trends in China, along with weak demand in Korea will limit total growth in Asia/Pacific in 2005. Nevertheless, regional growth will remain strong and more substantially outpace other regions in the long term, even though some short-term growth is expected to shift from 2005 to later years.

U.S. and Worldwide PC Shipments and Growth, 2001-2005

Region 2001 2002 2003 2004(1) 2005(1)

USA Units (M)

Consumer 15.5 17.1 20.0 21.4 22.5

Commercial 30.5 30.5 32.7 36.6 40.8

Total 46.1 47.6 52.7 58.0 63.3

Worldwide Units (M)

Consumer 48.3 49.8 56.6 63.5 68.6

Commercial 87.4 88.4 98.1 113.7 126.6

Total 135.6 138.2 154.7 177.2 195.1

USA Growth (%)

Consumer 9.8% 17.3% 6.9% 5.1%

Commercial -0.1% 7.2% 12.0% 11.4%

Total 3.2% 10.8% 10.1% 9.1%

Worldwide Growth (%)

Consumer 3.3% 13.6% 12.1% 8.0%

Commercial 1.2% 11.0% 15.9% 11.3%

Total 1.9% 11.9% 14.5% 10.1%

(1) Forecast data

(Shipments are in millions of units)

Source: IDC Worldwide Quarterly PC Tracker, December 2004

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.

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