Short-Term PC Outlook Weakens Slightly While Long-Term Growth Looks Solid, According to IDC

FRAMINGHAM, MA – MARCH 23, 2005 – Despite strong growth in Q4 and the rest of 2004, delayed recovery in Japan and a cautious outlook in the United States have led to slightly lower expectations for worldwide PC shipments in 2005. The updated forecast from IDC's Worldwide Quarterly PC Tracker lowers growth in total worldwide PC shipments for 2005 from 10.1% in the November release to 9.7%. The good news is that demand is likely to shift into later years and the growth forecast remains above 8% through the end of 2009. Total shipments are expected to reach 195.4 million in 2005 on growth of 9.7% with total shipment value growing by 5.3% to $209 billion. Shipments are projected to reach 273 million in 2009 with a value of $245 billion.

"Despite fears of slowing growth, particularly in the U.S. consumer segment, the PC market was fairly robust in the fourth quarter of 2004 with strong demand in the consumer and business segments," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "While overall growth in 2005 will be slower than 2004, we expect to see continued strength in portables and in emerging markets. Although worldwide growth will slip into single-digits this year, long-term drivers such as mobile adoption, replacement of older systems, and growing penetration will support healthy growth through the end of the decade."

"While IT buyers in the United States have indicated firm intentions to buy in 2005, we have kept the U.S. forecast modest because of what we see as a host of risk factors," added Roger Kay, vice president of Client Computing at IDC. "These factors include a recovery that appears to be getting long in the tooth, a lack of jobs growth, rising budget and trade deficits, persistently high oil prices, a treasury-draining foreign war, rising interest rates, a stock market that continues to move sideways, and record-low household savings rates."

Regional Outlook:

— United States – Following a second year of nearly 11% growth, the U.S. market is expected to slow to 7.6% growth in 2005. Consumer growth may fall to low single digits in the first quarter of 2005 but full-year growth should top 7%. Business growth will lead the market while the public sector is expected to trail other segments.

— Western Europe – Adoption of portable PCs continues to fuel growth in Western Europe. Growth in portable PC shipments should top 20% in 2005 following over 30% growth in 2004 and nearly 40% in 2003. The consumer segment remains a key driver with portable shipments growth of more than 40% outpacing the commercial segment by roughly 5 points. Growth of desktop PC shipments is expected to slow to low single-digits from nearly 10% in 2004.

— Japan – The business segment continues to lead the market, although relatively strong growth of 12% in 2004 is expected to fall below 5% in 2005. Unfortunately, the consumer and public sectors have not recovered, and growth in these segments is expected to be roughly flat in 2005.

— Asia/Pacific – Growth is expected to slow from over 16% in 2004, but remain in double-digits despite the Indian Ocean Tsunami and efforts to control China's economy. Public sector growth is expected to outpace growth in business segments by the end of the year, while consumer growth will slip into single-digits.

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

Region 2002 2003 2004 2005(a) 2006(a)

USA Units (M)

Consumer 17.1 20.0 21.8 23.4 25.6

Commercial 30.5 32.7 36.5 39.3 42.2

Total 47.6 52.7 58.3 62.7 67.7

Worldwide Units (M)

Consumer 49.8 56.6 64.2 69.9 75.9

Commercial 88.4 98.2 113.9 125.5 136.3

Total 138.2 154.8 178.1 195.4 212.2

USA Growth (%)

Consumer 17.3% 8.9% 7.6% 9.0%

Commercial 7.2% 11.7% 7.6% 7.4%

Total 10.8% 10.6% 7.6% 8.0%

Worldwide Growth (%)

Consumer 13.6% 13.5% 8.8% 8.7%

Commercial 11.2% 15.9% 10.2% 8.6%

Total 12.0% 15.0% 9.7% 8.6%

(a) Forecast data

(Shipments are in millions of units)

Source: IDC Worldwide Quarterly PC Tracker, March 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.

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 subsidiary of IDG, the world's leading technology media, research, and events company. Additional information can be found at www.idc.com

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