PC shipments showing signs of recovery, Gartner says

The PC market is showing signs of recovery, with the freefall of PC shipments skidding to a halt thanks to competitive PC prices and a continued interest in netbooks, Gartner said on Thursday.

Gartner said that PC shipments will decline due to the continued effects of the global recession, but at a slower rate than originally expected. Worldwide PC shipments are expected to fall by six per cent in 2009 compared to the previous year, an upgrade from the 6.6 per cent decrease earlier projected by Gartner.

That will set the stage for a healthy market recovery in 2010, when PC shipments will grow by 10.3 per cent, said George Shiffler, principal analyst at Gartner. A strong first quarter helped stabilize PC shipments in 2009, and Gartner is projecting a strong fourth quarter.

"By that time we expect the global economy to be on the recovery path. Once the economy is on a sounder footing, the demand will be strengthened," Shiffler said. Demand for PCs has been more resilient than originally thought, with buyers responding to the falling prices of PCs, he said.

"We've pierced new price points for laptops, and not surprisingly, people are responding to that," Shiffler said.

Netbooks triggered new lows in laptop prices of under $300, Shiffler said. That pricing pressure is now trickling into mainstream laptops, which have seen prices hover around $500, dropping below $400 in some instances, he said.

Netbooks are looking more like mainstream laptops as they get more expensive with larger screen sizes and keyboards, Shiffler said. At the same time, the prices of mainstream laptops are falling, which blurs the line between both the laptop categories.

But anecdotal evidence also suggests that people are finding out that netbooks have limited capabilities and are not substitutes for full-screen laptops, Shiffler said. That could drive some people back to buying mainstream laptops, he said.

Also challenging netbooks are ultrathin laptops, which are low-end, thin and light laptops priced starting at $500. However, ultrathin laptops have just hit the market, so their impact on netbooks cannot be assessed.

"There's a market for a low-end notebooks, it's just not clear if it's only the mini-notebook. It's going to get very interesting to see what happens," Shiffler said. The shipment of netbooks -- which Gartner refers to as mini-notebooks - will reach 21 million this year and 30 million next year, he said.

Microsoft's new Windows 7 OS, which is due for release on October 22, will not be a major factor in the recovery of PC shipments, Shiffler said. On Thursday, Microsoft said that it planned to let people who buy PCs with Windows Vista starting this Friday upgrade to Windows 7 for free, once it becomes available in October.

"People aren't going to buy a new PC because of a new operating system," Shiffler said. Microsoft could try to counter the PC slowdown by launching a campaign to show that the OS is offering something new in PCs, but that may still not get consumers to spend on the OS, he said. Enterprise users will put off adopting Windows 7 for at least a year until all the kinks of the OS have been ironed out, he said.

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