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PC market to remain on track in the second half

Posted: 26 Jul 2005 ?? ?Print Version ?Bookmark and Share


The PC market remains on course at the mid-point of 2005, with positive sentiment from suppliers and signs of solid demand indicating that shipments should continue growing in the second half of the year, iSuppli Corp. believes. (See charts below).

iSuppli's present forecast for 2005 PC unit shipments, a category consisting of desktop and mobile PCs and entry-level servers, is for 8.2 percent unit growth, with shipments rising to 206.9 million, up from 191.2 million in 2004.

In the third quarter, iSuppli expects global PC shipments to rise by 8.9 percent compared to the same period in 2004 and by 3.7 percent on a sequential basis. For the entire second half of 2005, iSuppli expects total PC shipments to rise by 6.7 percent compared to the same period in 2004.

In the desktop PC area, iSuppli predicts unit growth of 6.7 percent for 2005. The third quarter will bring desktop PC shipments of 37.1 million units, a 3.9 percent increase on a sequential basis, and an 8.2 percent rise compared to the same period in 2004. In the second half of 2005, iSuppli predicts desktop PC shipments of 77.1 million, up 6.1 percent compared to the last six months of 2004.

Looking at the present hotspot in the market, mobile PCs, iSuppli is forecasting an 11.8 percent rise in unit shipments in 2005, growing to 50.97 million, up from 45.6 million in 2004. Mobile PC shipments in the third quarter will rise by 3.1 percent sequentially to 12.6 million units and will produce year-over-year growth of 10 percent. The second half of 2005 will bring unit shipments of 26.2 million, representing 7.2 percent unit growth in mobile-PC shipments compared to 24.4 million units during the same period in 2004.

MPU suppliers send positive signals
iSuppli's outlook has been confirmed by positive comments from the two major suppliers of microprocessors for PCs: Intel Corp. and Advanced Micro Devices Inc. Both companies sent upbeat signals in their mid-quarter updates and in their general comments on their microprocessor shipments.

Intel indicated in its update on Jun. 9 that it was raising revenue estimates to the upper range of its previous forecast. Furthermore, iSuppli continues to hear reports of tight supply of certain microprocessors and chipsets, indicating that PC demand is strong.

iSuppli doesn't believe that AMD's antitrust suit against Intel will have any significant negative impact on the PC market in 2005. In fact, as the case builds momentum, it gains in publicity, which in turn raises the profile of the PC industry. This is good news in itself.

Back-to-school trends
Major PC OEMs now are beginning to introduce products intended for the back-to-school sales season. These products offer a combination of entertainment, personal productivity and communications. OEMs including Dell, Hewlett-Packard, Sony and Toshiba are aiming to cover all the bases with their new productswhile also providing a very decent bang for the buck.

In an interesting development, many universities now are recommending their prospective and returning students use laptops rather than desktopsas would iSuppli. Many students also now are choosing business PCs opposed to consumer models because they are better built and have longer buying cyclesi.e. the platform, its accessories and its associated products are available for a longer period of time.

However, this is not stopping the PC vendors from offering targeted models that include Windows Media Center Edition, TV tuners and DVD burners.

Back to school is a busy time for students and PC OEMs alike. Mobile PCs definitely are increasing their penetration into the education market, but this is not stopping the PC OEMs from offering very competitive multimedia- oriented desktop products.

The question is what will the future impact be of students who increasingly use Microsoft Corp.'s Windows XP Media Center Edition PC as both their computing and entertainment system? Is this helping to prime the future disposable income for entertainment PCs, which can replace DVD players, games consoles, VCRs, etc??

By grooming this set of users, the PC OEMs and Microsoft may be developing a new market for combined entertainment/productivity systems.

About the author
Matthew Wilkins
is a senior analyst with iSuppli Corp.

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