PC market growth could be stunted by weaker global economy

US recession, post-Olympics blues and costly oil could put brakes on PC market

Even though the worldwide PC market is expected to grow by double digit fissures, analyst firm Gartner is warning that growth could fall into single digits if what it calls ‘global economic headwinds’ strengthen.

The market research firm forecasts that worldwide PC shipments will total 293 million units in 2008, up 10.9%. Worldwide demand for mobile PCs, a robust replacement market and demand in emerging markets would be the key drivers fuelling the optimistic growth scenario. However, it pointed to a deepening US recession, the rising possibility of a sharp slowdown in China 's economy following the Beijing Olympics, and the elevated price of oil acting as potential dampers to the predicted expansion.

"In many respects, the PC market is fundamentally in good shape. Mobile PCs continue to exhibit strong momentum, emerging-market growth remains robust, and desk-based PC replacement activity is stirring," commented George Shiffler, research director at Gartner.

Gartner’s research identified technology and design improvements that have not only lowered the price of mobile PCs but that, in its opinion, also significantly improved their value proposition relative to desk-based PCs.

The relative value of mobile PCs has also been bolstered by the continued expansion of mobile access, and this increase in value continues to stimulate strong demand for mobile PCs across both mature and emerging markets. Gartner analysts said mobile PC shipments will gain additional momentum as so-called "affordable" mobile PCs, which address price points once thought impossible for mobile PCs, become more widely available.

Emerging-market PC unit shipments grew 22% in the fourth quarter of 2007, accounting for 60% of worldwide PC unit growth in Gartner’s survey. Robust PC shipments to emerging markets are being fuelled by several factors, the most important of which is strong economic growth.

However, Gartner warns that PC shipment growth will ultimately depend on the interplay between these drivers and the global economy.

"Slowing GDP growth can and does affect PC shipments through its impact on consumer incomes and business profits," Shiffler added. "Although the impact has probably softened over time as PC prices have fallen and PCs have become more indispensable to work and play, PCs are still far from being completely recession-proof. A deeper and more extended global slowdown emanating from the US and China would slow PC unit growth even more by sapping mobile PC demand, slowing emerging-market growth, and delaying replacement activity."

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