Sagging economy slams Q1 US PC sales

PC shipments in the United States take a sharp hit

PC shipments in the United States took a sharp hit in the first quarter of 2008 due to a sluggish economy, and some analysts don't see it getting a whole lot better this year.

Framingham, Massacusetts-based IDC reported this week that the US PC market growth slipped to a "meager 3.5%" year-over-year in the quarter. That comes in well under the 7% IDC had predicted. The global PC market, however, grew by 14.6% to 69.5 million units.

"The first half of '08 is definitely looking sluggish," IDC analyst Doug Bell told Computerworld. "At first glance, I'd say we'll be bringing our forecast down. I think companies and individuals will be putting off spending for six months to a year. There are a handful of drivers, but it will take more time to make a purchase."

Bell said he is still hesitant to say that the sluggish PC shipments will last all year, but he said he does think that a lot of desktop and laptop purchases will be pushed off until 2009. He also said that the US economy hasn't yet affected worldwide PC sales, but might in the coming quarters.

As in earlier quarters, much of the PC growth came from notebook sales, particularly the consumer notebook segment served by major retailers, according to IDC. Laptops are prompting consumers to stretch beyond the traditional one PC per household measure to one PC per person.

The laptop success is good news for Dell, which this week announced plans to increase its laptop offerings by 50% during 2008. The company disclosed the plan when it unveiled three new laptops earlier this week.

"Dell has positioned itself well. They're finally seeing results from the changes they've been making. And they're on the trend of mobility," said Bell. "Laptops moving over desktops will continue, especially on the consumer side. The commercial side will shift over more slowly, but it will shift, too."

Bell said that Dell's first quarter results were its strongest in almost two years, showing 21.6% growth in year-over-year shipments, according to IDC. Bell partly credits the company's newfound momentum to its new presence in major retailers like Best Buy, Wal-Mart Stores and Staples.

He did note that the company's first quarter 2007 numbers were so low that some growth was inevitable. Low numbers one year means any improvement the next year will show up quite favorably in year-over-year comparisons, Bell said.

The IDC report also showed that Hewlett-Packard's 17.4% first quarter growth in PC shipments also outpaced the overall market, though the rate was the lowest among the top five vendors. In the US, HP's PC shipments barely grew as the company began to face renewed competition from Dell.

Lenovo saw its PC shipments increase by 21% during the quarter.Lenovo's growth was driven by its dominant presence in the rapidly growing Asia/Pacific region, according to IDC.

And Toshiba saw its worldwide PC shipments grew by 20.6% to more than 3 million, according to IDC.