PC sales slip-sliding away

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

PC sales slip-sliding away . . .

By Neil Faba, posted Aug 01, 2001 Figures released last week show Canadian personal computer sales down since the device’s emergence, and industry insiders are bracing for more tough times ahead.

The figures, from International Data Corp., show a year-over-year decline in overall PC shipments in Canada from the second quarter of last year to the second quarter this year.

The 5.1 per cent drop is in marked contrast to the regular double-digit growth patterns the PC market has enjoyed since its debut in the early 1980’s.

The Canadian slump is in line with a global drop in PC shipment numbers.

Separate figures also released last week by IDC’s U.S. operation and by Gartner Group Inc. show a 2 per cent decline in year-over-year shipments in the second quarter.

And rather than simply being a one-off drop, this could be just the beginning of a string of sluggish sales quarters.

John Stanisic, hardware research analyst for IDC Canada, said there are several factors that have contributed to the drop, but points to last year’s Y2K compliance concerns as a possible trigger.

He noted that the flurry of new computers bought at the end of 1999 amidst fears of millennium problems, while boosting sales at the time, has helped the PC market climb toward its saturation point.

Stanisic said that last year’s penetration rate showed some 58 per cent of Canadian homes have a PC. That figure will likely only reach about 70 per cent, "and it will now be a small climb," he estimated.

He added that the efficiency of the machines bought two years ago, coupled with the lengthening life span of an average PC has decreased the need to go out and buy a new PC as often as in previous years. The average business desktop now lasts 3.5 years, up from a 3-year average in 1997.

"Because of Y2K, a lot of the PC’s you’ll find at work and in the home are relatively new, and they can do everything the average person needs them to. There’s really no incentive to buy another machine without a new killer app right now," said Stanisic.

A 13.8 per cent year-over-year drop in the consumer branded market led the overall drop in Canadian shipments. Commercial branded shipments, which had buoyed sluggish consumer sales in past quarters, were "essentially flat," according to IDC.

Despite the sales struggle, Dell managed to see a healthy 28.4 per cent year-over-year growth rate, to hold onto its number one vendor ranking. IBM, in second with a 1.2 per cent sales increase, was the only other manufacturer to see a boost in numbers.

Ralph Hyatt, VP of Compaq Canada’s Access Business Group, sees the drop off in standard PC sales as a good opportunity for other devices to emerge.

He noted that IDC’s numbers don’t include sales of handhelds. Compaq shipped 450,000 handhelds worldwide in 2Q 2001, said Hyatt, adding that the emergence of those products would likely have had some impact on PC sales.

Hyatt said the winners in the current PC market will be those companies who can offer consumers something new.

"Our direction in the marketplace is to use innovation to differentiate ourselves from our competitors," he said. "If we can build new innovations from the standard box, we can increase our market share."

Both Stanisic and Hyatt agree the sales drop has created the ideal market for PC purchases, as manufacturers try to outdo one another with price slashes. But just when the price cuts will translate into a buying binge is difficult to gauge.

Both see tough times ahead for the PC at least to the end of this year. But the launch of Windows’s new XP operating system, and a drop in the price of Intel’s P4 processor should lead to increased sales during and following the Christmas season, said Hyatt.

As always, the economy will be a factor in just how robust a sales turnaround the PC makers experience. Job cuts both in other sectors and the IT field itself, coupled with recent concerns with the US economy have played a role in slow PC sales. But the fact neither Canada nor the U.S. appears headed for recession is reason for optimism.

"The great unknown will be the economic environment," said Hyatt. "We’re planning for depressed markets through the end of this year. But looking to 2002, there will be a growth market."

URL for this story: www.canadacomputes.com/v3/story/1,1017,7057,00.html



-- Martin Thompson (mthom1927@aol.com), August 03, 2001


Moderation questions? read the FAQ