Confronting reality
Like politicians, the major market research companies are often guilty of over optimism in their forecasts. This is particularly true of the PC market, which stopped being able to rely on the consumer for growth a while ago - just ask Acer.
That didn't stop Gartner recently forecasting worldwide PC unit growth of 9.3 percent for this year, and 12.8 percent for 2012, a prognostication it felt compelled to dramatically revise down today. Gartner now reckons we'll only see 3.8 percent unit growth in PCs this year, and 10.9 percent next year.
As ever, when a professional forecaster has to revise their projections by so much, some kind of explanation is called-for. "Western Europe is not only struggling through excess PC inventory, but economic upheaval as well," explained Ranjit Atwal, research director at Gartner.
"U.S. consumer PC shipments were much weaker than expected in the second quarter, and indications are that back-to-school PC sales are disappointing. An increasing pessimistic economic outlook is causing both consumer and business sentiment to deteriorate in both regions. We're expecting consumer spending to tighten in response. Business spending will also tighten, but less than the consumer space."
All good points, but the crappy economic environment is hardly a bolt from the blue. Atwal is effectively saying things are worse than they had anticipated, and that's fine, but you still have to wonder if things are two-and-a-half times worse than they were at the time of the previous forecast, because that's the extent of the downward revision. Perhaps there are additional factors.
"Media tablets have dramatically changed the dynamic of the PC market and HP's decision to rethink its PC strategy simply highlights the pressure that PC vendors are under to adapt to the new dynamic or abandon the market," said George Shiffler, research director at Gartner.
"Vendors' tried and true business models are failing as traditional PC functionality is extended to other devices, and users continue to lengthen PC lifetimes. Vendors only seem to be flailing as they look for quick fixes to their problems. Unfortunately, the resulting chaos is just creating more confusion across the entire PC supply chain, impacting sell-in."
It's likely that tablets - which are essentially enlarged smartphones - have also had an indirect effect on PC sales by alerting people to the true potential of their smartphones. It's now easy for people to surf the web, check emails, buy products and play games on their phones, so for many the PC has become a far less compelling proposition. Tablets are getting all the attention right now, but the cannibalistic effect of smartphones shouldn't be underestimated.
"More worrisome for the long term is that Generation Y has an altogether different view of client devices than older generations and are not buying PCs as their first, or necessarily main, device," concluded Atwal. "For older buyers, today's PCs are not a particularly compelling product, so they continue to extend lifetimes, as PC shops and IT departments repair rather than replace these systems."
Gartner now seems to be predicting a long-term decline in PC volumes, and it's hard to argue with that. They will remain in place for years to come as productivity devices, but consumers will increasingly feel their computing needs are adequately covered by their mobile devices. We wouldn't be surprised to see a downward revision of that 10.9 percent forecast for 2012 before the end of this year.
