Gartner predicts slowing worldwide PC shipments

Market analyst Gartner is predicting worldwide PC shipments are slowing to a CAGR of 13 per cent.

Gartner is envisaging that PC revenue growth will continue to slow to a CAGR of 8 per cent, peaking near $US280 billion in 2005. The market analyst also anticipates that by 2004, sub-$1000 desk-based PCs will comprise about 52 per cent of worldwide desk-based PC shipments, despite having only made up 11 per cent of the worldwide desk-based PC shipments in 1998.

Todd Kort, a principal analyst at Gartner, suggests that PC resellers need to start developing services that supplement PC sales and enable them to build their margins.

"[Resellers] need to diversify their businesses beyond hardware and develop a stronger relationship with their customers," Kort says.

It is important for resellers to anticipate the replacement cycles of their customers, he says. Kort cites the example of corporate customers having upgraded just prior to Y2K which, assuming there is a three-and-a-half-year replacement cycle, will have to upgrade their PCs in 2002. "We're expecting 2003 to be a bad year for corporate PC sales because there'll be a big uptake in 2002, and consequently a decline in 2003."

"It's important to understand the installed base of your customers," Kort said, adding that there had also been indications that replacement cycles were lengthening, perhaps to as long as four years.

Commenting on the sub-$1000 desk-based PC market, Stuart Rose, director of major accounts at OEM Coretech, said end users have become increasingly well-educated over the past 10 years. "They're now on their second and third PCs," Rose said. "People are more aware of what they're getting than they were before."

Rose thinks the market is more discerning now than it ever has been before, adding that markets for companies like Coretech will always exist because it's dynamic in nature and can provide multiple solutions.

The growing knowledge of customers is a sentiment echoed by Vincent Le Plastrier, national computer mechandise manager at Betta Stores, which provides the buying service for Chandlers and Betta Electrical Stores.

"Our recent experience has been that, although the advertising of low-priced PCs seems to be a market requirement, when customers arrive in the store they are attracted to upgrading to a better specification at a higher price."

Le Plastrier is uncertain whether there remains a large market for low-priced entry-level PCs as the overall market becomes far more aware of specifications.

He concedes that prices have come down, but says there is a limit to what retailers can operate on. "I think they have to sell more value-adds, like on-site warranties . . . there's a whole lot of ways sales staff can get people to understand what the upgrade options are."

"I think the customer is a little bit more aware than they were in the past, so retailers need to take into account that the customer is expecting a reasonable level of service at the time the computer is installed and afterwards."