Gartner predicts PC market price war

By Matt Whipp

Posted on 18 Sep 2006 at 12:11

Gartner is predicting a price war in the PC market, with the launch of Vista doing little to help vendors' bottom lines.

Gartner's current figures already display the downwards pressure on pricing. As 2006 draws to a close, the analyst firm expects global shipments to finish up 10.5 per cent year on year, while revenues drop back 2.5 per cent to $198.3bn.

Indeed, Vista may have a particularly negative impact. It is already too late for a Christmas launch, and declining prices of consumer electronics, LCD panels and the escalation of hostilities between chip giants Intel and AMD, could result in a highly competitive Vista-less holiday season.

This could result in some spectacular Christmas offers. So when Vista does launch in early 2007, it's likely that anyone who had been thinking about a PC purchase will have already made one, resulting in Vista doing little to spur demand at that point. Besides, many vendors will be offering pre-launch Vista vouchers with their Christmas PCs.

Then, as more HDTV services get the green light coupled with excess production causing a decline in the price of LCD panels, the PC will be up against stiff competition from consumer electronics such as LCD TVs.

'The battle between PCs and LCD TVs in particular is likely to be especially intense over the holiday season given that LCD TVs will almost certainly be backed by aggressive holiday marketing and even lower prices,' said George Shiffler, research director for Gartner Dataquest's Client Platforms research program. '[PC] unit growth will continue to be price driven for the next several quarters as PC replacement activity wanes and the battle between Intel and AMD escalates.'

Shiffler expects even hard nosed price cutting to be impotent in fuelling long term unit growth in mature markets.

Instead, Gartner is looking to emerging markets to bolster the PC market. 'Price declines will also drive faster growth in emerging markets,' said Mikako Kitagawa, principal analyst for Gartner Dataquest's Client Platforms research program. 'Growth should be more sustainable in these markets due to low penetration, expanding economies, and a growing number of PC ownership initiatives. Emerging markets are expected to post solid double-digit growth during the next two years.'

See Gartner.com for more information.