Bad economy good for PC market

Gartner estimates Q2 PC demand grew 16% year over year as the weak macroeconomic conditions contributed to strong average-selling-price pressures for the notebook PC market, keeping laptop prices low and encouraging consumer demand.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 7/22/2008

Gartner Inc has estimated a year-over-year increase of 16% in PC demand for Q2 and noted the current harsh economic conditions as a driver, not a constraint, for the market’s growth.

Indeed, the research company said that the weak macroeconomic conditions have contributed to strong ASP (average-selling-price) pressures for the notebook PC market, which have helped to drive strong consumer demand. The ASP pressures have also benefited the larger PC OEM vendors with market share gains at the expense of the smaller PC manufacturers, Gartner said in its Semiconductor DQ Monday Report this week.

“Despite the concern over a macroeconomic slowdown impacting PC demand, the industry has yet to feel a substantial negative impact,” John Barber (pictured, right), a Gartner research director, said in the report. “Strong pricing declines of laptop PCs are a result of this slowing economic demand, but the continued strength of unit shipments has benefited the large PC OEMs, as well as the large semiconductor vendors in this space. For example, Intel recently reported a strong second-quarter performance, primarily driven by strong mobile PC demand, both quarter over quarter and year over year.”

Intel's Q2 announced last week out performed the challenging economic environment with revenue that beat Wall Street expectations and net income up 25% year over year.

Stronger-than-expected PC shipments also helped to drive up slightly Gartner's Q2 semiconductor forecast demand, the report noted.

“So far the strategy of aggressive price declines has benefited the PC industry with continued healthy demand from consumers,” Barber said. “However, as the year progresses, Gartner is closely watching any movement to the downside, because higher fuel prices and the housing crisis can have a direct impact in the second-half consumer spending cycle.”

For commentary and to share your thoughts on this news, see "PC demand up on Vista? Could be, just not how MS intended."

According to the preliminary data from Gartner, HP continued to lead the PC industry, maintaining the top position with 17.1% year-over-year growth and a worldwide PC shipment market share totaling 18.1% in Q2. Second-place Dell showed stronger year-over-year growth at 21.9%, with its Q2 market share inching up to 15.6% from 14.8% in Q2 2007. 

While HP and Dell have yet to report on the June quarter, smaller computer market player Apple Inc has, stating that it shipped nearly 2.5 million Macintosh computers in Q2, representing 41% unit growth and 43% revenue growth over Q2 2007.

Gartner said that smaller manufacturers were the most exposed to the pricing pressures, with a year-over-year market share decline, from 46.2% in 2007 to 44.8% in 2008.