PC Market Outlook Remains Strong Despite Slower Growth, According To IDC

FRAMINGHAM, MA – JUNE 13, 2006 – Worldwide PC shipments grew by a healthy 12.6% in the first quarter of 2006 – ahead of March projections of 11.8% growth. Although PC shipment growth slowed from 15.1% in 2004 and 16% in 2005, the market continues to exceed expectations and the outlook for 2006 has improved, according to IDC's Worldwide Quarterly PC Tracker. As expected, first quarter growth in Western Europe slowed considerably, and growth in other major regions also subsided from last year. In addition, growth in the United States and Western Europe fell by roughly 1% more than projected. However, despite these inhibitors, growth in Japan, Asia/Pacific excluding Japan, and the Rest Of World regions all surpassed IDC's March projections by several points and boosted not only first quarter growth, but contributed to a modest improvement in the forecast.

The outlook for shipment growth in 2006 increased to 10.8% from a March projection of 10.5%. The outlook for 2007 was boosted nearly 1% to 11.7% and 2008 growth projections also increased slightly. Although growth rates for 2009 and 2010 were reduced slightly, total volumes remain higher than earlier projections because of the higher near-term growth. Total shipment volume is expected to reach 284.5 million in 2008 and 333.7 million in 2010 with a value of US$253.9 billion, and US$271.1 billion, respectively.

"Slower growth in mature markets, the delayed release of Windows Vista, and rising inventory increase the risk of slower growth," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "Nevertheless, we expect these factors will shift volume from 2006 to 2007 rather than reduce overall consumption while strong demand in emerging markets, portable adoption, falling prices, incomplete market penetration, continuing technology development and aggressive competition between component vendors, PC vendors, and distribution channels will continue to fuel solid growth."

Despite slowing shipment growth and aggressive pricing, the outlook for total PC shipment value is also positive. There are some years where value is expected to decline in more mature regions, particularly for desktops, but the total value of worldwide PC shipments is expected to increase by 3-5% annually through the end of the forecast. The shift to Portable PCs is a key factor in value growth. Desktop growth in emerging regions as well as the introduction of dual core processors is also contributing.

"Consumers are becoming an increasingly strong force in both regional and worldwide PC shipments," said Bob O'Donnell, vice president Clients and Displays "The movement towards consumer notebooks, in particular, will help maintain the double digit growth rates that we are predicting for the worldwide PC market through 2008."

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

Region 2004 2005 2006(a) 2007(a) 2008(a)

USA Units (M)

Consumer 21.8 23.6 25.6 29.0 32.6

Commercial 36.5 40.3 41.9 46.0 49.4

Total 58.3 63.9 67.5 75.0 82.0

Worldwide Units (M)

Consumer 64.9 78.4 88.4 100.0 111.2

Commercial 114.4 129.4 141.9 157.1 173.3

Total 179.2 207.9 230.2 257.1 284.5

USA Growth (%)

Consumer 8.3% 8.5% 13.5% 12.1%

Commercial 10.4% 4.1% 9.7% 7.5%

Total 9.6% 5.7% 11.1% 9.3%

Worldwide Growth (%)

Consumer 20.9% 12.7% 13.1% 11.3%

Commercial 13.2% 9.6% 10.8% 10.3%

Total 16.0% 10.8% 11.7% 10.6%

(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, 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.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a division of IDG, the world's leading technology media, research, and events company. Additional information can be found at http://www.idc.com.