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Slowing demand for microprocessors and graphics cards in Q3 and Q4 2010 seems to be very alarming for the PC industry in general as it illustrates slowing demand towards technology in general. Nonetheless, market tracking firm Jon Peddie Research draws an optimistic picture for a lucrative part of the market, the PC gaming hardware.

According to estimations by Jon Peddie Research (JPR), in 2011 expenditures on PC gaming hardware are set to jump to over $22 billion globally, with a 27% gain in 2011 across the three segmentations of the market: mainstream, performance and enthusiast. The increased demand for rather expensive pieces of hardware is projected to be driven both by lowering previously prohibitive prices onto superior devices as well as advances of software.

Ted Pollak, senior gaming analyst JPR notes a number of drivers for the PC hardware market, including the natural cycle of PC hardware purchases from historical inflection points, system demands of modern FPS (first person shooters) and RTS (real-time strategy) titles, cheaper high resolution displays, SSDs (solid state drives), and the convenience of digital distribution services like Steam and Direct2Drive. Mr. Pollak also attributes growth to newly converted PC gamers tiring of the limitations of aging console platforms, the widely applauded advancements in DirectX 11, and the increasing appetite of PC gamers for high quality speaker systems, headsets, mice, cases, cooling, and other accessories and customizations.

JPR identifies a very strong growth trend for systems, accessories, and upgrades in Asia. China is approaching $2.7 billion in expenditures, as gaming continues to grow in popularity and internet café’s upgrade machines to run newer titles. Russia is also forecasted to make significant increases in PC Gaming hardware expenditures, showing notable growth in the most expensive Enthusiast class and an amazing 22% CAGR in the mainstream sector out to 2014. The profile of the typical gamer has changed. Most gamers are technology enthusiasts equipped with the best cameras, several computers, new games, handheld consoles, and often, a new phone every year. In addition to games they are often photo and video enthusiasts who place extreme demands on their systems.

Jon Peddie, the president of JPR, notes that interest in 3D capable machines and displays is growing and there is rising demand from PC gamers for monitors with higher resolution and better color capabilities. Traditionally used by graphic designers, “wide gamut” displays are capable of showing more of the color spectrum, often making games look better. Peddie also notes that Enthusiast PC gamers are showing interest in displays that exceed 1080p (the maximum resolution that HDTV and game consoles are capable of utilizing).

The report also highlights the multi-billion dollar market opportunity for semiconductor companies and system integrators who market the game capabilities of sub $1000 PC systems. Jon Peddie Research has identified significant interest in the game capabilities of even the lowest level systems in the $500 range, as games offered through social networks and casual game sites claim more interest from consumers. This is of particular importance in Intel and AMD’s race to provide the best graphics processing with their integrated chips that include the capabilities of both CPUs and GPUs.

Tags: JPR, AMD, , Intel, Nvidia, Business

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