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 finds 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 predicts. 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 that they expect to spend more on PC purchases to cope with year 2000 issues and 80% said they anticipate stagnant or lower PC budgets in the first years of the new millennium.
The year 2000 problem is occurring because most old software code was written with two-digit date fields that read the "00" in 2000 as "1900" and therefore fail to make correct calculations. Rather than deal with tracking and fixing the code, some corporations are buying new year 2000-compliant hardware and software.
But after that 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.
Forrester, in Cambridge, Massachusetts, can be reached at +1-617-497-7090 or at http://www.forrester.com/.
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