Major IT Industry Downturn Ahead, Gartner Reports

PC Market May Face Massive Hit in 2006 – 2008

by Anton Shilov
12/01/2004 | 03:46 PM

Meanwhile IT companies enjoy great demand for various technologies, including personal computers and servers, analyst firm Gartner Research says hard times that may totally redesign the market of PCs are ahead. According to the firm’s predictions, during the years with insufficient demand at least three of the top ten PC makers will vanish into oblivion.


Gartner, cited by CNET, predicts annual unit shipments growth of 11.3% and annual revenue increases averaging 4.7% between 2003 and 2005. Despite that relatively profitable period, 2006 will bring tougher times as demand for new PCs slows and competition between vendors increases, the research firm said. If the prediction is correct, the 2006-to-2008 timeframe will make for better times than 2000 to 2002. The market contracted in 2001 and grew only slightly in 2002, leading to major changes in the PC market, such as merge of HP and Compaq.

The analyst firm believes that the latest PC replacement cycle will be completed by the end of 2005 and between 2006 and 2008 the major drivers for growth will be so-called emerging markets, such as Asia and Latin America, however, this is unlikely to keep all the PC makers profitable. That period will see average annual unit shipment and revenue growth slow to 5.7% and 2%, respectively, Gartner predicted.

Gartner believes that facing downturn in demand for PCs manufacturers of computers may merge or acquire each other, some may focus on regional markets competing with smaller white-box manufacturers, spin off PC businesses and dedicate themselves to other industries. There is also a trend for PC companies to offer various consumer electronics under their brand-names. Furthermore, some may focus on various mobile appliances. Any PC market-related moves among the mentioned are likely to significantly alter the landscape of the market.

Industry leaders do not currently discuss possible market downturn in 2006 – 2008.

Dell, Hewlett-Packard and IBM rank as the world's top three manufacturers in unit shipments, while Fujitsu, Fujitsu-Siemens, Toshiba, NEC, Apple Computer, Lenovo Group and Gateway rank fourth through 10th.