While the market has registered double-digit shipment growth the
past few years, tougher times lie ahead, according to the US
research firm.
PC unit growth is forecast to average 5.7% annually from 2006
through 2008, half the 11.3% average of 2003 through 2005. PC
revenue growth will average 2% annually from 2006 through 2008,
less than half the 4.7% average of 2003 through 2005. Emerging
markets will account for more than 60% of PC market growth from
2006 through 2008.
"With PC replacements still in full swing, 2005 should be a
reasonably strong year for PC vendors," said Leslie Fiering,
research vice president for Gartner's Client Platforms group.
"However, the end of the replacement cycle is likely to strain
viability for even the largest PC vendors in 2006 and beyond."
Currently, the top 10 worldwide PC vendors, by unit shipment,
are: Dell, HP, IBM, Fujitsu/Fujitsu Siemens, Toshiba, Acer, NEC,
Legend, Gateway and Apple Computer. Of the top 10 worldwide
vendors, only Dell has consistently been profitable in the past
several years.
According to Gartner, the PC divisions of HP and IBM are
vulnerable to being spun off if their drag on margins and
profitability are deemed too great by their parent companies.
PC price competition will intensify as vendors struggle to
maintain growth in a competitive market environment characterised
by weak replacement activity and the increasing significance of
emerging markets.
"Global vendors will be forced to continue maximising supply
chain efficiencies and, finally, abandon any efforts to
differentiate other than on price and service levels," Ms Fiering
said. "Vendors that have yet to do so may attempt to diversify into
related markets pursuits, such as consumer electronics, to bolster
margins. Others may attempt mergers with rivals to improve margins
through economies of scale."
She added, "Exiting the market may be the only logical choice
for global vendors bleeding profits and struggling for share."
Emerging markets
The growing prominence of emerging markets could open
opportunities for local vendors in those regions to pursue global
markets. Particularly in Asia/Pacific, leading local vendors, such
as China's Lenovo, appear well positioned to leverage their strong
local-market standing and low-cost operating models into a global
presence.
"Local PC vendors in emerging markets should consider acquiring
local rivals as a means to consolidate home market position and
develop the scale economies required to springboard into a global
presence," Ms Fiering said.
Gartner analysts said customers will be able to exploit the
approaching buyers' market to pressure vendors on price and other
incentives. However, customers also must consider the vendor's
commitment to the PC market, as well as the vendor's "staying
power" when selecting a manufacturer.
