Supply Chain Reaction

Research out this week from Gartner and IDC suggests that number 2 PC maker Dell is turning a corner, but at a rather unfortunate time, as that same research suggests this year and next will see less-than-stellar PC sales.

The obvious reason is the coming recession (and it is coming, despite what some analysts had to say at this week’s Industry Strategy Symposium). Economics 101 says that if consumers are low on cash, be it from their ARM-financed mortgage or $40 fill up at the pump, they won’t have the dough to shell out for a new PC. Despite the recession being US based, it will have a global impact. And despite what some companies in the PC supply chain have claimed based on their location or the amount of business they take in from other regions, Wall Street is recognizing the threat. (See what happened to Intel’s stock this week as an example of how the Street is reacting.) 

On top of the economic situation is Vista OS. The memory market felt the chill caused by Vista last year, as well, when some business customers held off on corporate upgrades. As a consumer, I personally held off on buying a new home PC in avoidance of Vista, instead going for yet another Mac, giving us a 3:1 ratio in our house.

The 1 PC is a Dell, issued by EDN’s parent company Reed Business Information, that I’m typing away at now. Truth be told, and contrary to what you may believe based on my previous Dell blogs, I’ve always bought Dells in the past (that was until I moved in with my now husband, perhaps the biggest Apple fan on the east coast). They were, once upon a time, good PCs. But somewhere along the way, their quality slipped while their prices didn’t, at least not in equal measure.

Now second place to HP in terms of shipments, third place, low-priced Acer is nipping at Dell’s heels. Acer, you’ll recall, bought Gateway in October, and with that recorded nearly 33% year-over-year 2007 shipment growth, more than any of the other top 5 vendors, according to Gartner’s preliminary figures. Meanwhile, Dell had less than 2% growth. Fourth-place Levovo is pretty hungry, too, and after its consumer Idea line takes off, could be a more formidable opponent to Dell, as well.

So while Dell may have turned a corner by achieving shipment growth in Q4 for the first time in the last five quarters, if it can continue that – up against the cash-poor, credit-crunched US consumer, delayed corporate upgrades, and an unfavorable economic situation – is yet to be seen.

See our related news story on the Gartner and IDC research, “Repositioning of major OEMs brings about solid PC market,” and share your thoughts below.