Gartner drops worldwide PC market growth expectations

Apple iPad

The iPad and its fellow are eating into the PC market, says.

Tech research firm Gartner Monday announced that it is trimming its growth expectations for the worldwide PC market from 17.9 per cent for 2010 over 2009 down to 14.3 per cent.

And for 2011, it now expects shipments of 409 million units, up 15.9 per cent from 2010, down from previously-announced growth estimates of 18.1 per cent.

The good news? It’s not because of a moribund economy. The bad news? It’s because the company is seeing greater cannibalization of the PC business by tablet devices.

“These results reflect marked reductions in expected near-term unit growth based on expectations of weaker demand, due in no small part to growing user interest in media tablets such as the iPad,” said , research director at Gartner. “Over the longer term, media tablets are expected to displace around 10 percent of PC units by 2014.”

To be fair, the tablet isn’t alone in Gartner’s view as forces that “will weaken the market going forward” – it’s also joined by next-generation smartphones and other devices that are replacing the mobile PC as the device of choice for accessing data while on the road. And , research analyst at Gartner, noted in a statement that it’s not just mobile PCs that are having their lunch money stolen – desktop PCs also stand to lose ground, the firm believes, as continue to take hold in the enterprise, meaning that organizations can opt to use thin clients or a myriad of other endpoint devices instead of a traditional desktop.

In the same statement, Gartner research director said that while PC’s are still seen as necessities, the trend towards commoditization and driving volumes at ever-lower price points are “finally impacting the industry’s ability to induce new replacement cycles.” The analyst firm predicts that many consumers, and even businesses, will “continue to refrain from buying PCs” as a result of the impact of the last two years of economic challenge. And in the long term, the firm expects users to extend the lifetimes of their PCs as a result of using other devices as either their primary or complementary computing devices.

“As the PC market slows, vendors that differentiate themselves through services and technology innovation rather than unit volume and price will dictate the future. Even then, leading vendors will be challenged to keep PCs from losing the device ‘limelight’ to more innovative products that offer better dedicated compute capabilities.”

In its statement, Gartner said it sees five major trends “challenging the PC industry.”

  1. Emerging markets are driving growth. By the end of 2011, the company said, “emerging markets” will account for more than 50 per cent of total worldwide PC sales. This is especially challenging because the firm notes that in these markets, “there is a good chance that consumers will simply leap frog PCs,” going straight to mobile devices that are less expensive. Without firmly establishing the PC as the route to the Internet, this could result in a dramatic shift.
  2. Consumer wallet continues to shrink. Home mobile PCs are expected to take the biggest hits, both in the face of recovery from economic challenges and in light of new competition from media tablets.
  3. Challenge of emerging devices. The analyst firm notes that media tablets are “rapidly finding favour with PC buyers who are attracted to their more-dedicated entertainment-driven features and their instant-on capability,” particularly eroding demand for netbooks.
  4. Extended Life Cycle. Call it the logical conclusion of point three – as the PC becomes a less important of users’ overall computing experiences, Gartner expects users to update their computer hardware less frequently than they historically have.
  5. Thin Clients. While Gartner does not expect hosted virtual desktops to “earnestly impact mature professional markets until 2012, at the earliest,” the long term impact of desktops delivered to devices could be significant as organizations opt for non-traditional hardware like thin clients and refurbished PCs over newer computers.
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