Worldwide PC shipments fell 1.9 percent in the fourth quarter of 2008 (4Q08) following five years of almost uninterrupted double-digit growth, say analysts IDC. But the company says that as the economic environment continues to deteriorate in 2009, PC shipments are expected to fall by more than 8 percent in the first half of 2009 and gradually improve to a small positive growth in the fourth quarter.  

According to the company, despite the severity of the crisis, the situation is better than in the past downturns because PCs are far more important and far less expensive today. A typical PC today costs half what it did in 2000 at the beginning of the last recession, and prices continue to drop at a rapid rate, making PCs more affordable and less likely to be sacrificed in tough times.  

The PC market is also more driven by replacements than it used to be. The five years preceding the 2001 recession saw PC shipments increase at a compound annual growth rate of 18.8 percent, against 13.6 percent for the five years before our current crisis. This slower growth means a larger share of existing systems will need to be replaced sooner. In addition, the share of portables has risen dramatically from less than 20 percent in 2000 to 50 percent in 2008. Portable PCs typically have a shorter lifespan than desktops, further supporting replacements despite efforts to extend system life.  

The company explains that the PC market is also far more global today. In 2000, the US accounted for almost 37 percent of PC shipments and emerging markets (including Asia/Pacific (excluding Japan), Latin America, Central and Eastern Europe, Middle East and Africa, and Canada) accounted for less than 30 percent. In 2008, the US share is down to 23 percent and emerging markets are up to 49 percent.  

Nonetheless, emerging markets in Latin America, Central Europe, and the Middle East and Africa have been hit hardest by the financial crisis. Consumer and distribution channel financing has become increasingly tight, which will drive investment and credit availability in these markets even lower. As a result, IDC’s forecast projects that these markets will suffer double-digit declines in volume over the next three quarters. Mature regions will weather the current economic climate somewhat better due to their ability to absorb financial losses.  

“There are a number of reasons why the PC market will not fare dramatically worse in the current environment than it did in the 2001 recession – even if the current economic environment is notably worse,” says Loren Loverde, director of IDC’s Worldwide Quarterly PC Tracker. “Pricing will become even more aggressive, and there will be further consolidation, but the PC industry will not go the way of the financial or auto industries in this cycle.”