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PC Sales Reverse Declines, with Windows 7 in the Wings PC Sales Reverse Declines, with Windows 7 in the Wings
By Mark Long
October 15, 2009 2:02PM

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Global PC sales are showing signs of recovery, reversing declines to rise 0.5 percent in the third quarter by Gartner's estimate and 2.3 percent by IDC's figures. A surprise was Acer's rise to second in the market, passing Dell, as mini-notebooks proved popular. The release of Windows 7 and economic improvements bode well for fourth-quarter PC sales.
 

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The global PC market is showing signs of a recovery, according to industry analysts. Gartner reports that worldwide PC shipments totaled 80.9 million units in the third quarter -- a 0.5 percent increase from the year-earlier period and a reversal of the research firm's expectations for a 5.6 percent decline in the quarter.

"Sequentially, third-quarter shipments grew 18 percent, which is higher than the historical seasonal growth from the second to third quarter," said Gartner Principal Analyst Mikako Kitagawa.

IDC analysts pegged global PC unit sales even higher at 2.3 percent growth -- a dramatic reversal from year-on-year declines of 6.8 percent and 2.4 percent in the first two quarters this year. "The competitive landscape, the transition to portables, new and low-power designs, growth in retail and consumer segments, and the impact of falling prices are all reflected in the gains by HP and Acer, as well as overall market growth," said IDC analyst Loren Loverde.

Acer Outperforms

No one was surprised to see Hewlett-Packard continue to lead the global PC market in terms of shipments with a 20.2 percent market share. What caught some industry observers off guard, however, was Acer's ability to grab 14 percent of the global market -- good enough to unseat Dell (12.7 percent) as the world's number-two shipper of PCs in the third quarter.

Analysts say demand for low-cost systems in the back-to-school season drove consumer sales of Acer's mini-notebooks, which helped the company outperform the PC market in virtually all regions. However, Kitagawa observed that mini-notebook sales weren't the only reason for Acer's growth.

"They were very aggressive on entry-level notebook pricing" and "they have low-priced consumer notebooks, which put tremendous pressure onto competitors," Kitagawa said. "Our rough estimate is that Acer's mini-notebook percentage would range between 20 to 30 percent of their total shipments."

Kitagawa also cautioned against reading too much into Acer's shipment gains in the quarter. "PC vendor performance cannot be determined solely by unit market-share gains, as related revenues and margin performance are key to surviving in a very competitive market," the Gartner analyst said.

"Dell put a priority on profit protection across all regions," Kitagawa noted. Moreover, Dell is not a big mini-notebook player "as this is very thin margin market," Kitagawa said. Weakness in the professional market at a global level "is another cause of the decline."

Looking Ahead

Earlier this week, Intel CEO Paul Otellini told investors that strong demand for computer chips helped drive healthy third-quarter sales at the company, which suggests the PC industry is well on the way to recovering from its slump. Even better, analysts expect the release of Windows 7 on Oct. 22 will boost PC sales in the fourth quarter and into next year.

"With the forthcoming launch of Windows 7 and an expected commercial refresh beginning in 2010, the prospects for future PC market growth are very solid," said IDC Vice President Bob O'Donnell.

Gartner believes inventory adjustments around the launch of Windows 7 could artificially affect shipment volumes during the fourth quarter. Still, the launch of Microsoft Relevant Products/Services's new OS isn't expected to have anything more than "a minimal impact" on PC unit growth, the firm said.

"Recent OS releases have not been a growth driver in the PC market," Kitagawa noted. "However, the timing of Windows 7 is favorable for the industry due to expected economic improvements and an overdue hardware replacement cycle."
 

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