Gartner Says Worldwide PC Units Set to Post Double-Digit Growth in 2005, but Revenue Will Be Flat.

STAMFORD, Conn. -- Second graph, second sentence of release should read: In 2006, worldwide PC units are expected to grow 8.7 percent, but PC revenue will decline 0.4 percent (sted In 2006, worldwide PC units are expected to grow 10.5 percent, but PC revenue will decline 0.4 percent).

The corrected release reads:

GARTNER SAYS WORLDWIDE PC UNITS SET TO POST DOUBLE-DIGIT GROWTH IN 2005, BUT REVENUE WILL BE FLAT

Worldwide PC unit shipments are on pace to grow 12.7 percent in 2005; however worldwide PC revenue is forecast to grow just 0.5 percent this year, according to a preliminary forecast by Gartner, Inc.

Worldwide PC unit shipments are projected to total 206.6 million in 2005, with PC revenue totaling $202.7 billion. In 2006, worldwide PC units are expected to grow 8.7 percent, but PC revenue will decline 0.4 percent. Gartner analysts said the disparity in growth rates is attributable to continuing declines in the average selling price (ASP) of PCs.

"The quest for growth is forcing vendors to test the limits of PC price elasticity," said George Shiffler, principal analyst for Gartner's Client Platforms research. "The whole dynamic is compounded by the fact that buyers have increasingly come to expect sharp price declines."

"The drop in mobile PC ASP has been particularly remarkable," said Mikako Kitagawa, principal analyst for Gartner's Client Platforms research. "PC vendors have succeeded in increasing the unit share of higher-margin mobile PCs, but this has resulted in a significant sacrifice of desk-based revenue as vendors struggle to maintain the value proposition of desktops at the low end of the market".

ASPs are likely to remain under strong downward pressure. "Mounting cost pressures will eventually slow ongoing ASP declines, especially if PC component prices firm," Mr. Shiffler said. "However, as recent earnings announcements illustrate, vendors are facing strong competitive pressures. These pressures are only likely to intensify if unit growth slows. Vendors may have little choice other than to cut prices or offer more lower-cost, de-featured machines."

PC growth will continue to be buoyed by strong mobile PC shipments as buyers are increasingly attracted to mobile computing because of lower prices and enhanced wireless experiences. Worldwide mobile PC units are forecast to grow 31 percent in 2005.

Additional information is available in the Gartner report "3Q05 Update: Global PC Forecast Scenarios, 2005-2006." The report provides a preliminary assessment of the PC market with a breakout of desk-based and mobile PC shipments. The report is available on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=484714.

About Gartner

Gartner, Inc. (NYSE: IT) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 10,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has over 3,900 associates, including more than 1,100 research analysts and consultants, in more than 75 locations worldwide. For more information, visit www.gartner.com.