PC Market To Remain Strong Through Year-End, According To IDC, Long Term Growth Outlook Is Stable At 9%

FRAMINGHAM, MA – SEPTEMBER 19, 2005 – The persistent strong demand in international markets that boosted second quarter growth in the worldwide PC market has also raised expectations for the second half of the year. According to the latest forecast from IDC's Worldwide Quarterly PC Tracker, total PC shipments in the second half of 2005 are now expected to reach nearly 110 million, with growth of 12.9% versus a May target of 107.2 million and growth of 10.4%. The biggest drivers in the second half are likely to be the consumer segments in Western Europe and Rest Of World (including Central and Eastern Europe, Middle East and Africa, Latin America, and Canada) with an important contribution from portable PCs. Consumer markets in other regions as well as the commercial segment will also contribute.

"We continue to see remarkable growth in the consumer segment and in emerging markets," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "Low prices combined with low penetration, recovering or growing economies, and general investment in technology continue to fuel rapid growth in these markets. While we expect the Euro to weaken against the dollar and PC growth rates to slow from recent quarters, we still anticipate strong growth for another couple quarters."

With the strong second half of the year, total shipments for 2005 are expected to reach 204.6 million on growth of 14.1% – slightly below 15.3% growth in 2004, but up from a May projection of 11.4%. Total shipment value is expected to rise only 5.8% to $211.6 billion for all of 2005. For 2006-2008 shipments are expected to grow by roughly 9% before slowing to 8.3% in 2009. Growth of shipment value is also expected to slow, although it should remain positive throughout the forecast.

"The outlook for the U.S. market remains unchanged for 2005, despite a stronger-than-expected second quarter," said Bob O'Donnell, vice president Clients and Displays at IDC. "A combination of factors that include high crude oil prices, some component shortages, and limited decline in average prices will likely prevent the U.S. market from repeating its strong second quarter performance."

Regional Outlook:

— United States – Although consumer spending recovered strongly in the second quarter, the downward trend in growth, rising oil prices with no real improvement on the employment front, consumer growth is expected to fall to mid-single digits by the end of the year along with the commercial segment. Although hurricane Katrina caused substantial damage and consumer confidence has fallen significantly, the impact to PC shipments is expected to be relatively short-term with growth remaining in mid to high single-digits throughout the forecast.

— Western Europe – While growth in Europe is expected to slow as the Euro weakens and the current replacement wave passes, IDC still expects solid growth through the end of the year. Channel inventory rose during the second quarter of 2005, however consumer demand – particularly for portables remains substantial. Overall growth is expected to remain above 15% through the end of the year before slowing in 2006.

— Japan – Building momentum in the consumer segment and a rise in business growth support an improving outlook in the Japanese market. While already high portable penetration means Japan is not benefiting from a shift to portables as much as other regions, the gains in the consumer segment have boosted the outlook for 2005 growth to high single digits, surpassing the U.S. for the first time since 2001.

— Asia/Pacific – Asia Pacific is also experiencing a surge in consumer and portable PC purchases, although the share of portables is smaller than in more mature regions. Consumer growth is expected to lead the market through the end of the year before falling behind the commercial segment. Unlike the Western Europe and Rest Of World markets, which have contributed significantly to global market strength in recent years but are expected to slow considerably beyond 2005, growth in Asia Pacific is expected to remain at roughly 12% from 2006 through the end of the forecast.

U.S. and Worldwide PC Shipments and Growth, 2002-2006


USA Units (M) 2002 2003 2004 2005(a) 2006(a)

Consumer 17.1 20.0 21.8 23.4 25.4

Commercial 30.5 32.7 36.5 39.5 42.1

Total 47.6 52.7 58.3 62.8 67.5

Worldwide Units (M)

Consumer 49.9 56.7 64.3 76.1 82.8

Commercial 88.8 99.0 115.1 128.6 140.5

Total 138.8 155.6 179.4 204.6 223.3

USA Growth (%)

Consumer 17.3% 8.9% 7.3% 8.4%

Commercial 7.2% 11.7% 8.1% 6.8%

Total 10.8% 10.6% 7.8% 7.4%

Worldwide Growth (%)

Consumer 13.5% 13.5% 18.3% 8.8%

Commercial 11.4% 16.3% 11.7% 9.3%

Total 12.1% 15.3% 14.1% 9.1%

(a) Forecast data

(Shipments are in millions of units)

Source: IDC Worldwide Quarterly PC Tracker, August 2005

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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