PC market to stall after 2000, analyst says

PC market to stall after 2000, analyst says

A spending surge will boost PC sales next year, as companies replace old equipment that could fail due to the year 2000 problem. But after that the market will slow and then stall, halting 17 years of industry growth and leading to lower PC prices, according to Forrester Research.

Corporate spending on PCs will decline after companies replace aged machines, and remain stagnant through 2002, the market researcher found in a new study. PC vendors will drop prices to try to spur demand, but corporations will increasingly go the route of Internet appliances, further dampening the market for personal computers.

Companies trying to replace desktop machines before 2000 will push PC revenues to $US55 billion next year, but that demand will die out by the end of next year, causing a drop in PC buying for the first time in a decade, Forrester predicted. That decrease, coupled with slow global sales, will lead to slashed PC prices, further dropping revenue, which Forrester expects to slide to $47 billion in 2000.

Forrester interviewed 50 Fortune 1000 companies to gauge PC buying requirements and budgets for the report PC Industry Roller Coaster. Those queried said they expect to spend more on PC purchases to cope with year 2000 issues and 80 per cent said they anticipate stagnant or lower PC budgets in the first years of the new millennium.

Rather than deal with tracking and fixing code, some corporations are buying new year 2000 compliant hardware and software.

But after the crisis abates, the PC industry will be pushed by new demands. Companies aren't likely to continue the buying spree brought by year 2000 issues, so instead of investing in PCs, corporations increasingly will expend application development money and energy to support Internet browsers and appliances, Forrester said.

The Internet emphasis will lead companies to replace PCs with less costly options and that will keep the PC market from ever again achieving sales like those expected next year, the research found.

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