IDC slashes PC shipment growth

SAN FRANCISCO: "What's new is that public sector spending on PCs is slowing," Loren Loverde, director of IDC's worldwide quarterly PC tracker, said in a statement. "The decline in government and education spending is not unexpected, but it is accelerating, and the impact is showing on PC demand."

IDC now expects worldwide shipments of PCs in 2003 to 145.6 million, down slightly from its December 2002 forecast of 147.5 million.

Overall, however, the PC market is behaving as expected, Loverde said. "We have moderate consumer growth, incremental technology improvements, a cautious business sector, and persistent uncertainty over the economy, Iraq and North Korea," he said.

Sales of PCs to corporations will likely start showing some improvement this year added IDC PC analyst Roger Kay.

"Our sense is that it's time for the enterprise market to start working on renewals," Kay said. "It's not bubbling but it's feeling the need to turn over the base."

The last major upgrade of PCs at companies was in 1998 and 1999, before the date change to 2000. Chief executives of major PC makers have said those PCs will need to be upgraded soon, but they have not yet seen any major signs of an upgrade.

In the fourth quarter, worldwide PC shipments reached 38.4 million, with a value of $46.9 billion, IDC said. Year-on-year shipment growth of 3.7 percent was in line with forecast, reflecting moderate consumer demand and continued caution on the part of businesses, IDC said.

Worldwide shipments of PC rose 1.5 percent in 2002 to 136.2 million from 134.2 million in 2001, IDC said.

In the U.S., public spending may be curtailed by declining budgets. Many U.S. states are facing their worst budget crunches since World War II.

Slow demand in Europe in 2002 was a bit of a surprise, IDC said, citing slow commercial shipments of PCs due to weak economic conditions and political uncertainty.

In Japan, strong business and public sector demand helped offset a weak consumer market, IDC said. For 2003, IDC forecasts shipment growth in Japan of 2.9 percent following two years of declines. The Asia Pacific region, excluding Japan, followed the broad trend of declining public sector spending in 2002