Worldwide PC unit growth is on pace to total 352 million units in 2011, a 3.8% increase from 2010, according to the latest preliminary forecast by Gartner. PC shipments are forecast to see better growth by the end 2012, when units are expected to reach 404 million units, a 10.9% increase from 2011.

PC unit growth for both 2011 and 2012 has been reduced from previous projections: from 9.3% growth for 2011 and from 12.8% growth for 2012. The notably lower outlook for 2011 PC growth is largely due to sharply downgraded forecasts for Western Europe and the United States in the second half of the year.

"Western Europe is not only struggling through excess PC inventory, but economic upheaval as well. 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 are expecting consumer spending to tighten in response. Business spending will also tighten, but less than the consumer space," said Ranjit Atwal, research director at Gartner.

The lower outlook for 2012 is the result of a weaker 2011, and also a slower start to 2012 - with an expectation for better growth in the second half of next year as economies stabilize and new mobile PC form factors enter the market. Even so, the slowdown in the market is notable: total unit shipments in 2012 are expected to barely reach 400 million units, which was originally a target for 2011.

"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. 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," said George Shiffler, research director at Gartner.

Gartner analysts said that while PCs remain important to consumers and businesses, purchases can be easily delayed, especially when there are complementary devices that are seen to be more attractive.

"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. 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," added Mr. Atwal.

Tags: Business, Gartner