PC vendors “flailing” as sales forecasts tumble

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Hunger for tablets and economic hangover forces Gartner to reconsider PC market's prospects

PC manufacturers face a testing two years as a changing technology landscape throws their business plans into chaos, according to research from Gartner.

The warning comes as the company slashed its sales growth projection for 2011 from 9.3% to only 3.8%, with global sales expected to hit a total of 352 million units.

A combination of changing tastes, pressure from other gadgets such as smartphones and tablets and an increasing sense of the PC as a long-life item have all conspired against manufacturers, according to the analysts.

Unfortunately, the resulting chaos is just creating more confusion across the entire PC supply chain, impacting sell-in

"An increasingly pessimistic economic outlook is causing both consumer and business sentiment to deteriorate,” said Ranjit Atwal, research director at Gartner, adding demand for PCs was falling across all age groups.

"More worrisome for the long term is that Generation Y has an altogether different view of client devices than older generations and are not buying PCs as their first, or necessarily main, device," he said.

“For older buyers, today's PCs are not a particularly compelling product, so they continue to extend lifetimes, as PC shops and IT departments repair rather than replace these systems."

Manufacturer rethink

The big question for the industry is how manufacturers react to the changing tastes of end users, and how many might follow HP's lead and consider quitting the business altogether, a situation that is casting still further uncertainty across the market.

"Media tablets have dramatically changed the dynamic of the PC market and HP's decision to rethink its PC strategy simply highlights the pressure that PC vendors are under to adapt to the new dynamic or abandon the market," said George Shiffler, research director at Gartner.

"Vendors' tried and true business models are failing as traditional PC functionality is extended to other devices, and users continue to lengthen PC lifetimes.

"Vendors only seem to be flailing as they look for quick fixes to their problems. Unfortunately, the resulting chaos is just creating more confusion across the entire PC supply chain, impacting sell-in."

The company also cut its sales growth forecast for 2012, from 12.8% to 10.9%, but said even that figure was boosted by the weak forecast for this year.

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