Commercial PC Demand Boosts Outlook For Second Half 2004, While Longer Term Expectations Remain Conservative.

FRAMINGHAM, Mass. -- Consistent gains in commercial PC demand have led IDC to raise expectations for 2004 PC shipments to 176.5 million on growth of 14.2%. Commercial PC shipment growth of 17.2% in the second quarter was the highest since mid 1999, and the fourth consecutive quarter over 13%, according to IDC's Worldwide Quarterly PC Tracker. Although worldwide consumer growth met expectations in the second quarter, growth is expected to slow from near 20% in the second half of 2003 to only 9% in the second half of 2004. Even with the slowdown in consumer activity, commercial growth has led IDC to increase projections for total 2004 shipment growth from a June estimate of 13.5% to a current projection of 14.2%.

Despite the increase, second quarter growth accounted for 58% of the total change to 2004 shipment volumes with only 42% falling into the second half of the year. In addition, growth estimates for 2005 were lowered 0.2% to 10.5% and projections for growth in future years remain in single digits. There are also regional variations in consumer and commercial growth that are important to be aware of.

"The market needs to be careful in interpreting these results," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "Strong growth in Western Europe and Rest of World played a significant role in boosting second quarter results, while growth in the United States missed forecasts and slipped into single-digits. Similarly, it's important to note that we've lowered growth expectations for the consumer and portable markets even though projections for overall growth have increased slightly in the short term."

High growth in recent quarters is partially the result of a depressed market in prior years. As the market recovery matures, year-on-year comparisons will become more difficult, and growth is expected to subside.

"The tempered forecast of the U.S. market is somewhat in contrast to higher growth elsewhere, particularly in Europe," added Roger Kay, vice president of Client Computing at IDC. "Overall market maturity in the United States and uncertainty in both political and economic spheres has led us to revise our forecast modestly downward."

Regional Outlook:

--United States - Commercial demand should remain strong, supporting double-digit growth. However, consumer growth is expected to slow significantly from a recovery-driven growth spurt in the second half of 2003.

--Western Europe - Overall growth should remain strong as the recovery continues to be supported by a strong Euro. Nevertheless, growth will begin to slow as portables growth cools and year-on-year comparisons become more difficult.

--Japan - Slow growth is expected to continue while business spending remains conservative and competition from other products limits consumer demand.

--Asia/Pacific - Commercial growth continues to lead the recovery while portables growth slows with rising penetration.

U.S. and Worldwide PC Shipments and Growth, 2001-2005

Region                         2001   2002   2003   2004(a) 2005(a)

USA Units (M)
Consumer                       15.5   17.1   20.0    21.6    22.8
Commercial                     30.5   30.5   32.7    36.4    40.7
Total                          46.1   47.6   52.7    58.0    63.5

Worldwide Units (M)
Consumer                       48.3   49.9   56.5    63.2    68.7
Commercial                     87.4   88.3   98.1   113.3   126.3
Total                         135.6  138.2  154.6   176.5   195.0

USA Growth (%)
Consumer                              9.8%  17.3%    7.8%    5.7%
Commercial                           -0.1%   7.2%   11.4%   11.9%
Total                                 3.2%  10.8%   10.0%    9.6%

Worldwide Growth (%)
Consumer                              3.3%  13.3%   11.8%    8.7%
Commercial                            1.1%  11.0%   15.5%   11.5%
Total                                 1.9%  11.9%   14.2%   10.5%

   (a) Forecast data
   (Shipments are in millions of units)

Source: IDC Worldwide Quarterly PC Tracker, August 2004

IDC's Worldwide Quarterly PC Tracker gathers PC market data in 55 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

For more information, or to subscribe to the research, please contact Kathy Nagamine at 650-962-6423 or [e-mail].

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