Worldwide PC Shipment Growth to Slow in 2006 . PC Vendors Face Challenges with Stagnant Deskbased PC Sales

Gartner: worldwide PC shipments are projected to total 234.5 million units in 2006, a 10.7 percent increase from 2005 shipments of 211.8 million units. However, the PC industry will experience slower growth in 2006 compared to 2005 when PC shipments increased 15.5 percent. While mobile PC growth remains strong, deskbased PC replacement activity has peaked and will shortly subside, slowing PC market growth in the process. We expect a steady decline in deskbased replacement activity over the next year. The impact will be especially dramatic in mature markets where new deskbased penetration is also slowing and mobile-for-deskbased substitution is increasing. Worldwide deskbased PC shipments are projected to grow 1.9 percent in 2006. However, there will be a sharp contrast between mature and emerging markets. Deskbased PC shipments to mature markets are forecast to decline 8.6 percent, while deskbased PC shipments to emerging markets are forecast to increase 19.5 percent in 2006. The next two years will produce a turning point for the PC industry. Deskbased sales to mature markets such as the United States and Western Europe have been PC vendors’ mainstay up to this point. Vendors are likely to see a fundamental shift in the market as they come to grips with the steep decline in mature-market deskbased growth and are forced to seek growth in other market segments. There is added uncertainty for the PC industry in 2006 that could stall PC sales further this year. Microsoft has not announced a precise release date for its new operating system named Vista, and Intel is in the process of rolling out a number of technical innovations in the face of strong competition from AMD. End-user concerns about the availability and value of these new technologies could result in some buyers holding off PC purchases until later in 2006 or beyond. Mobile PCs remain a bright spot for the industry. worldwide mobile PC shipments are forecast to grow 31.4 percent in 2006 with shipments to mature markets expected to grow 22.1 percent and shipments to emerging markets expected to grow 38.7 percent. 1Q06 Update: global PC Forecast Scenarios, 2006-2007

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