Here's how you know that the IT market is part of the global economy. IT is no longer immune to downturns, and when the economy gets the flu, IT does too.
The box counters at Gartner this morning released their projections for PC shipments in 2009, and the late-season winter storm that was pounding the Northeast was in perfect synchronicity with the dismal projections the market researcher is making for PC sales and shipments this year. The news is not good, and it is also not unexpected because a number of different factors are making consumers and companies keep their existing PCs.
Gartner is projecting that worldwide PC shipments will decline by 11.9 per cent to 257 million units, what the company has characterized as the "sharpest unit decline in history," considerably worse than the former top bummer, when PC sales contracted by 3.2 per cent in 2001, when the Western economies went into recession after the dot-com bust and the 9/11 terrorist attacks.
"The PC industry is facing extraordinary conditions as the global economy continues to weaken, users stretch PC lifetimes and PC suppliers grow increasingly cautious," explained George Shiffler, research director at Gartner.
This time around, the emerging markets - Brazil, Russia, India, and China - are not going to save the shipment cookies, as they certainly did in 2008.
For the full year, PC shipments in 2008 across all types - desktops, notebooks, netbooks, and workstations - rose by 10.9 per cent, to 302.2 million units, according to Gartner.
But the wheels started to come off the PC market in the fourth quarter, when Gartner reckoned that PC shipments rose by 1.1 per cent to 78.1 million units, but shipments in the United States fell by 10.1 per cent to 15.6 million units and the Asia/Pacific region had the sharpest decline since Gartner's Dataquest unit started tracking the PC space, with shipments up only 1.8 per cent to 19.5 million units.
EMEA was the rock in the fourth quarter of 2008, with shipments up 4.9 per cent to 30.4 million units, but that rock will start crumbling, according to Gartner, as 2009 progresses. Or recesses, as it turns out. Latin America's shipments in Q4 were up 10 per cent to 7.2 million, and PC unit shipments in Japan in the final quarter of the year were up 7 per cent to 3.5 million.
"Growth in both emerging and mature markets will be driven by similar dynamics even if the precise impacts vary somewhat," says Shiffler. "Slower GDP growth will generally weaken demand and slow new penetration, lengthening PC lifetimes will reduce replacements, and supplier caution will keep inventories at historic lows until confidence in a recovery eventually firms.
"The impact of reduced replacements will be especially acute in mature markets, where replacements are estimated to account for around 80 per cent of shipments."
Gartner expects sales of 155.6 mobile PCs, up nine per cent - this includes both laptops/notebooks and the relatively new mini-notebook, what most people call netbooks.
But desktops are falling, with shipments expected to be down 31.9 per cent to 101.4 million units. Gartner expects mini-notebooks to account for 21 million units this year, up 79.5 per cent, but this rise does not offset the decline in desktop sales. If you do the math, notebook sales will only grow shipments by 2.7 per cent to 134.6 million units this year, so we can see where the real growth is going to be.
Netbooks will account for eight per cent of total PC shipments this year, according to the company. That's the good news. The bad news, if you are trying to stay in the PC business, is that prices are going down. Gartner says that the average netbook cost $450 in the United States in the fourth quarter, but that will drop to $399 by the end of this year.
After the declines in 2001, PC makers know better than to build up large inventories, and starting in the final quarter of 2008, according to Gartner, they sent messages through their supply chains that they would be cutting back on manufacturing. So when you do go to buy a new PC, it might take a little while longer to get to you because PC makers are going to keep inventories low. ®