Framingham (MA) – Oh dear, this is not what PC makers hoped for. In times of a troubled financial world, PC sales are dropping at a dramatic pace and netbooks were brought to market to alleviate the pain. But netbooks are not just creating sales that would not be there otherwise. They are eating into the traditional notebook market, the cash machine of the industry.
When IDC published its Q1 PC shipments report this morning, we weren’t particularly surprised that the data was somewhat sobering. IDC estimates that global PC shipments were not quite as weak as initially expected, but still down by about 6.8%, which was the most significant decrease since Q3 2001. IDC indicated “some positive activity” at the end of Q1, but stated that the commercial sector and “key macroeconomics indicators” remain “weak”.
Possibly most interesting are the findings surrounding the notebook and netbook segments. Born from an idea to create a niche below the traditional notebook and to cater to the needs of emerging countries, the netbook has become the only PC market with significant growth around the world and is widely considered to be the segment that keeps PC makers breathing these days. IDC said that 5.7 million netbooks were shipped in Q1 and were way ahead of original expectations.
But it seems that those who are buying netbooks are not just consumers who are buying these devices as additional computers, but as their portable systems of choice. IDC said that netbooks are now negatively affecting traditional notebook sales. While those 5.7 million netbooks produced $2.2 billion in sales (for an average price of $386 per unit), the sales volume of notebooks fell by $8.4 billion from one year ago. It isn’t surprising that notebook makers are scrambling to add value to their netbooks to lift the price tag (HP sells netbooks with prices up to $700, for example), but netbooks clearly are digging a hole the industry can’t get out of anymore, at least not at this time.
And the situation may get worse. As Intel is pushing its good-enough Atom processor, AMD is preparing low-cost mobile platforms due out later this year, which will aim to drive down the cost of mainstream notebooks – even more than we have seen with the firm’s Neo processor. IDC believes that netbook pricing will increase over time, and the segment will grow to a share of 9.5% of all PC shipments and 17.3% of portables, causing the 2009 shipment value to drop by almost 18% while volumes decline by just 3.2%.
“The economic crisis continues to dampen PC demand and force changes in the market,” said Loren Loverde, director of IDC’s Worldwide Quarterly PC Tracker, in a prepared statement. “Mature regions are navigating the changes better than emerging regions in the short-term as finances remain more liquid, but from 2010 forward emerging regions will have the advantage in both growth and volume. Meanwhile, the concentration of growth in the consumer segment and in evolving categories like Mini Notebooks is quickly raising the stakes of competition.”
Overall, IDC now expects PC shipments to drop to 278.2 million units in 2009, down from 287.3 million in 2008. 2010 is still seen as a year of recovery with shipments estimated to climb to 298.8 million, while 2011 is expected to be a year of strong growth: By then PC shipments will reach 338 million, IDC said. The 400 million-barrier will be broken in 2013 when PC makers will sell an estimated 419.8 million units, IDC said.
