PC Market Continues Rapid Growth In Fourth Quarter of 2005 as Annual Shipments Reach New Higths

IDC: The PC market continued to expand at an impressive rate in the fourth quarter of 2005 with worldwide shipments increasing by more than 17% year on year, . Although shipments in North America were incrementally behind forecasts, international markets were able to pick up the slack to produce the third consecutive quarter of growth greater than 17%. Portable PC demand also remained a major driver that should contribute to revenue as well as shipment growth. Fourth quarter shipments of 61.1 million were up 17.1% boosting full year shipments to 208.6 million with growth of 16.4%. The figures were slightly ahead of November projections of 15.1% growth in Q4 and 15.8% for the year.

Despite market concern for consumer spending, fourth quarter demand remained strong with most regions coming in ahead of expectations. Although growth has declined slightly from the second and third quarters, the market’s resilience in the face of rising interest rates, high fuel prices, a weaker Euro, and other potential inhibitors puts the market in a great position to start 2006.

The market continues a fundamental shift toward mobile computing that is contributing significantly to top-line growth. Portable PCs are expected to capture a record 38% of Client PC shipments in the United States this quarter, while incentive strategies for Desktops based on low prices alone may have reached their limits. Still, there were ample opportunities in the fourth quarter for vendors who offered desktops as home digital appliances, a trend we anticipate could reignite the desktop market in 2006 and 2007 with the launch of Microsoft Vista, Intel's Viiv, and PC vendors' expected endorsement of these initiatives.

Regional Outlook

• United States – Demand for Portable PCs continued to drive solid growth in the U.S. market during the fourth quarter. Consumer demand remained strong despite competition from other electronics and concerns that hurricane damage as well as rising interest rates and fuel prices would reduce spending. In fact, demand for desktops was relatively slow as buyers preferred portable systems despite their higher cost.

• EMEA – The EMEA market turned in another outstanding performance during the final quarter of the year with strong retail sales and a particularly strong December. Portable adoption remained a key factor throughout the region while business investment also contributed significantly to growth within CEMA.

• Japan – Persistent consumer demand helped sustain momentum in the Japanese market. Overall growth declined slightly from the double-digit rates in the second and third quarters as expected but remained in high single-digits.

• Asia/Pacific (excluding Japan) – PC shipments in the APeJ region continued to expand at a rapid pace in the fourth quarter. A slowdown in commercial growth in India was only a small blemish on the region’s performance as steady growth in China and South Korea as well as strong portable adoption in many countries highlighted solid demand throughout the region.

More: Worldwide Quarterly PC Tracker Publ 2006018