July 17, 2008
Do not be fooled by these seemingly rosy PC shipments figures
Gartner and IDC released their latest PC shipments figures on Wednesday, showing computer shipments up either 16 per cent or 15.3 per cent in the second quarter, depending on who you ask.
Given the uncertainty in the global economy, it’s tempting to view the numbers - which were better than expected - as a sign that trouble in the financial and housing sectors has yet to spread to the IT sector. But do not be fooled: beneath these rosy headline figures lie clues about an impending slowdown.
IDC said growth in computer shipments in Asia was slower than expected during the quarter- a situation it blamed on rising energy prices and other inflation concerns cutting into IT spending there. If true, that would undercut one of technology bulls’ key arguments heading into the current downturn - that robust sales in Asia and other fast-growing emerging markets should help offset weakness in the US.
Adding to the clouded outlook, Gartner analyst Mikako Kitagawa says that the rise in the number of computers shipped masked steep declines in average selling prices, particularly in the US and Europe. While it is common for PC prices to fall from year to year, steeper than expected price cuts could hit PC makers’ profit margins, and prolonged price pressure could put the squeeze on smaller PC makers. Ms Kitagawa says the industry “could ultimately see a significant wave of consolidation if stronger vendors continue to press their pricing advantage.”
So what is the bottom line? Unfavourable economic fundamentals mean that “demand could remain depressed in the coming quarters if economic pressures continue, even with sustained price decreases,” says David Doud, an IDC analyst.
