PC revenues shrank in Q4, say analysts

Revenue from PC sales during the key Christmas quarter plummeted compared to the same period in 2007, according to research from analysts IDC and Gartner.

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Revenue from PC sales during the key Christmas quarter plummeted by 15 percent from the same period in 2007, according to research from analysts IDC and Gartner.

PC sales are down by 15 percent compared to the same period last year, according to Gartner.

IDC estimated worldwide computer shipments were down fractionally by 0.4 percent year-on-year to 77.3 million, and down 2.5 percent on the previous quarter. "The dramatic slowdown was enough for a sequential decline of 2.5 percent from the third quarter," said IDC, despite the expected increase for the holiday season.

Gartner calculated that the global market actually grew 1.1 percent year-over-year to 78.1 million during the last quarter of 2008, but those numbers were overshadowed by "steep declines" in the average selling price of PCs, Gartner analyst Mika Kitagawa said in a Wednesday interview.

Sales of recently introduced mini-notebook PCs, or netbook computers, proved strongest, and cannibalised their larger, pricier notebook brethren. Despite higher sales volumes, netbooks have a low average selling cost which impacted overall revenue. IDC found sales of low-cost netbooks grew 20 percent, but that was only half of the growth the category had experienced earlier in the year.

The sharp revenue decline Gartner is projecting would be the worst for the PC market since the third quarter of 2001, when PC dollar sales fell 26 percent year-over-year, said Gartner's Kitagawa.

With the pre-Christmas quarter showing disappointing results, vendors will be hoping for a boost in spending on new PCs in the next three months, with the first quarter traditionally one of the slowest due to the end of the tax year.

Unlike 2001's drop-off, which was the result of a price war led by then-market leader Dell in response to the dot-com crash, the most recent decline was caused by a combination of rising netbook sales and the poor economy, said Gartner.

But IDC said the two recessions are more similar than people think. "For all that's been said about this recession being different than 2001, the drop in PC growth from mid-teens the preceding year to near flat growth in the most recent quarter shows that the impact of this crisis looks similar to the last time around," said Loren Loverde, program director for IDC's Worldwide Quarterly PC Tracker.

But netbooks only comprised about five percent of all PCs shipped in Q4, according to Kitagawa, up from three percent in Q3.

But netbooks have had an impact disproportionate to their actual popularity, she said. First, they have created a new lower-priced market segment for consumers.

Secondly, they have forced makers of regular notebooks to cut prices on existing laptops or introduce newer, cheaper notebook PCs in response, said Kitagawa.

Despite their rapid rise, it's still too early to declare netbook sales a "sustainable" trend, she said.

Gartner and IDC both ranked the top five PC vendors worldwide, based on marketshare, and the findings were similar. Hewlett-Packard remains the top PC vendor worldwide. Gartner said HP had 19.1 percent market share and IDC said HP sales grew 3.1 percent to 15.2 million units. Dell was second with 13.2 percent, but slipped a full percentage point from last year, said Gartner. Acer, Lenovo, and Toshiba finished third though fifth. Acer, led led by its netbook sales, grew shipments 31.1 per cent year-over-year to take 12.3 per cent of the market. Lenovo (7.1 per cent) and Toshiba (4.7 per cent) round out the global top five.