Gartner Dataquest Says This Holiday Season Won't Bring Much Joy to PC Vendors.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 15, 2002

PC Forecast for Fourth Quarter of 2002 Shows Minimal Growth

Worldwide PC shipments are projected to reach 35.1 million units in the fourth quarter of 2002, a 1.5 percent increase from the same period last year, according to Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB).

During the fourth quarter, PC vendors usually see a spike up in sales during the holiday season, but Gartner Dataquest analysts said they don't expect a big boost in sales this year.

"The gloomy economic situation is likely to affect U.S. and Japan holiday season purchases," said George Shiffler, principal analyst for Gartner Dataquest's computing platforms and economics research. "Given that home PC penetration is relatively high in the world's developed economies, limited funds may induce users to extend the life of their PCs. Many families may also choose other devices such as game consoles, DVD players and digital cameras instead of upgrading their old PCs."

"There's also a lack of compelling technologies that will inspire consumers to purchase a PC this holiday season," said Charles Smulders, vice president for Gartner Dataquest's Computing Platforms Worldwide group. "Rewriteable DVD prices are anticipated to fall, but the ongoing battles between rewriteable DVD drive formats (DVD-RW or DVD+RW) continue. Uncertainty over the outcome of this format war is at least partially likely to undermine the effect of lower drive prices."

The worldwide PC industry is on pace for PC shipments to reach 127.3 million units in 2002, a 1.8 percent increase over 2001 shipments. The industry will see single-digit growth in 2003, as worldwide PC shipments are forecast for a 7 percent increase.

"Economic uncertainty and its effects on business and consumer confidence will continue to impact PC sales in 2002 and 2003," said Shiffler. "On a regional basis, the U.S. economy has clearly bottomed out, and it remains weak and hesitant. Japan and Western Europe appear to be backsliding and war jitters have upped the price of oil."

The need to upgrade aging PCs, especially those bought around 1999, will continue to grow. However, there is anecdotal evidence that users and purchase decision makers are choosing to extend the life of PCs longer in light of weak incentives to upgrade and the economy.

"PC vendors should plan for a less-pronounced replacement cycle than previously projected because of the extension of PC life cycles in the installed base," Smulders said. "PC users or purchase decision makers should carefully assess the positive issues, such as cost savings, versus the negative effects, such as productivity loss, of extending PC life cycles."

Additional information is available in the Gartner Dataquest report "4Q02 Global PC Forecast Scenarios Update - 2002-2003." This report examines current market conditions, as well as the new drivers and inhibitors for the industry going into 2003. This report can be purchased on the Gartner Web site at http://www.gartner.com/DisplayDocument?id=376745&ref=g_search.

This information is produced by Gartner Dataquest's Computing Platforms research cluster. This program is designed to help companies focus on opportunity, with coverage of the complete range of computer hardware platforms as well as associated supply chain components, systems, distribution channels and end-user groups. For more information on this program, please contact Becky Tonnesen at 408-468-8287, or by e-mail at [e-mail]. Reports can be accessed on the Internet at www.gartner.com.

Gartner Dataquest is the leader in providing the high technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the information technology industry.

Gartner, Inc. is a research and advisory firm that helps more than 10,500 clients leverage technology to achieve business success. Gartner's businesses consist of Research, Consulting, Measurement, Events and Executive Programs. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has 4,000 associates, including more than 1,000 research analysts and consultants, in more than 75 locations worldwide. Fiscal 2002 revenue totaled $907 million. For more information, visit www.gartner.com .