PC market hits unexpected slowdown, IDC reports

Bad news on the PC front, says research company IDC. IDC this week lowered its PC market forecasts for 2002 and 2003 to reflect weakening demand for PCs from both consumer and business users.

Total worldwide PC shipments are now expected to reach 135.5 million in 2002 on growth of 1.1%, with growth of 8.4% projected for 2003. The numbers were reduced from the June forecast for growth of 4.7% in 2002 and 11.1% in 2003.

IDC says the public sector and small-business segments continue to spend for the moment but the return on investment by medium and large-business has been slow, particularly in the U.S. and Europe. Consumer demand, which accounts for roughly a third of PC shipments, also remains weak, IDC said.

“The momentum we saw coming into the second quarter has all but disappeared as businesses continue to postpone PC investments and consumer spending has slowed,” said Loren Loverde, director of IDC’s Worldwide Quarterly PC Tracker. “Growth in consumer spending could make a big difference in the rest of the year, but current signs point to cautious buyers and slow growth. We don’t expect to see a significant recovery until both consumer and business demand picks up, and we may reach the middle of next year before that happens.”

IDC says the slowdown is the result of caution by U.S. corporations, consumers’ uncertainty about continued employment and a saturated market. “The higher cost of capital brought about by the continued decline of the stock market has sustained a note of caution in U.S. corporate IT spending,” said Roger Kay, director of client computing at IDC. “Despite fluctuations in consumer confidence, the employment picture, which has remained depressed, is dampening consumer PC spending. Saturation is also increasingly a factor, as the mature U.S. market swings over more fully to a replacement model. To remain viable, vendors will have to adapt their distribution strategies to these new realities.”