Vendor performance blamed for slowing PC sales in Q3
Business and Law Features

Vendor performance blamed for slowing PC sales in Q3

Framingham (MA) - Growth in U.S. PC sales pulled back in the third quarter of this year, from year-over-year gains of more than 5% in the first half of the year to flat sales in the third quarter. IDC believes that "poor vendor performance" as well as a "slower pace of replacements" are to blame for the decline in market growth.

Worldwide sales, according to the market research firm, increased by 9.1% year-over-year, thanks to a 13.5% increase in shipments outside the U.S. The preliminary shipment estimate indicated weak demand in the U.S. was felt "slightly more in the commercial segment than in the consumer segment," which IDC believes is a sign that factors other than the release of Vista affected the market in Q3.

"The slower growth reflects a mix of poor vendor performance in the third quarter and a slower pace of replacements," IDC wrote. The pullback was significant enough to prompt the firm to revise its sales estimate for the next three quarters as well as the 2006 forecast. IDC now believes that 2006 PC sale sin the U.S. will reach about 66.1 million units, about 3.5% more than in 2005 (63.9 million). Worldwide units are expected to touch 229.4 million, up 10.4% from 207.8 million last year.

"Growth in PC shipments remains strong despite slower growth in the United States in Q3 and in Europe and Japan in the second quarter," said Loren Loverde, an analyst with IDC. "The market is moving toward portable PCs and emerging markets even faster than expected. While growth in these areas is welcome, the outlook for mature markets is becoming more conservative."

Double digit growth for the U.S. is expected to return in the second half, partially as a result of the slow second half of 2006. Overall volume projections for 2007 remain lower than prior forecasts, but longer term growth "should remain near 8% from 2008 to 2010 as replacements and technology evolution, including adoption of portables, Vista, and new form factors, drive growth," IDC wrote.