Dataquest: Economy curbs PC recovery

Worldwide PC shipments for 2002 and 2003 will rise, but lack of compelling technologies and worries about the economy are causing users to hang on to their older computers, putting a damper on industry recovery, according to market research company Dataquest.

PC shipments will reach 127.3 million units this year, up 1.8 percent from last year, according to a forecast released last Friday by Dataquest, a unit of Gartner Inc. Next year, PC shipments are forecast to grow 7 percent compared to this year's shipments, the company said.

The numbers indicate some recovery in spending for PCs, and are healthier than the 4.2 percent decline in shipments that occurred in 2001. However, they are a far cry from the double digit-growth in PC shipments experienced in the late 1990s, according to Dataquest analysts.

PC buyers are still concerned about the economy, according to George Shiffler, principal analyst for Dataquest's computing platforms and economics research. "There is growth but not strong growth, and in fact it's a pretty marked slowdown from 1999 to 2000, when users went on a year-2000 buying binge," Shiffler said. PC shipment growth in 2000 was 13.6 percent, he said.

"The PCs bought during the buying binge are due to be replaced, but the sticky wicket is that users may be hanging on to them longer than they normally would because they are worried about the economy," he said.

In addition, though prices are falling on PC components and peripherals, there is no one compelling technology that is working to overcome general economic fears, according to Dataquest's report. For example, rewriteable DVD prices will most likely decline, but the ongoing war among vendors over drive formats is creating uncertainty in the market and undercutting the attraction of falling prices.

This lack of an attractive, standout technology is putting the brakes on growth in PC shipments for the fourth quarter this year, which includes the end-of-year buying season, Dataquest said.

The company forecasts worldwide PC shipments to be 35.1 million units in the fourth quarter, a relatively weak 1.5 percent increase from last year's fourth quarter.

Financial and technology issues will curb holiday purchases especially in developed countries such as U.S. and Japan, and other countries with high PC penetration in the home, Dataquest said.

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