The world's top two technology industry-research companies last week downgraded their forecasts for a recovery in the world's PC market this year, citing economic and political uncertainty related to a possible US invasion of Iraq.
"[The] threat of war has hurt the global economy, which adversely affects PC purchases," Gartner Dataquest Inc researchers George Shiffler and Kiyomi Yamada said in a statement on Tuesday.
"These economic jitters, in turn, impair PC sales by depressing sales among first-time buyers and replacement sales for aged PCs."
Connecticut-based Gartner Dataquest revised its prediction for growth in worldwide computer shipments for this year down from 7.9 percent to 6.6 percent.
On Friday, Massachusetts-based International Data Corp (IDC) reduced its prediction from 8.3 to 6.9 percent. A total of 136.2 million computers were shipped last year, according to IDC. The change is not surprising, IDC said.
"In many ways the PC market is performing as expected," IDC researcher Loren Loverde said in a statement. "We have moderate consumer growth, incremental technology improvements, a cautious business sector, and persistent uncertainty over the economy, Iraq, and North Korea. What's new is that public sector spending on PCs is slowing. The decline in government and education spending is not unexpected, but it is accelerating, and the impact is showing on PC demand."
Governments in the US, Western Europe and Asia have all tightened their belts because of declining budgets, cutting spending on computer equipment, the report said.
The consumer and corporate markets will need six months to bounce back, another IDC researcher said. "The launch of new form factors, such as the media PCs and tablets, has added some zest to the PC market," said Roger Kay, director of Client Computing at IDC. "However, volumes of these systems still lag their buzz, and technology refresh will not be sufficient to drive significant shipments until the second half of the year, given economic and political uncertainties."
"Further out, we expect the impact of these new technologies to be more substantial," he said.
Gartner's researchers agree.
"Vendors should continue to expect modest sales in the first half of 2003 and anticipate healthier sales growth in the second half of 2003, driven by revived first-time sales and stronger replacement demand."
Since last year, the computer industry has been anticipating a boost in sales, as many installed PCs bought in 1999 and 2000 were thought due for replacement. However, PC owners have not rushed to replace their PCs, preferring to extend the lives of their existing ones.
The downward revisions come less than one month after the two research firms increased their earlier 2003 forecasts based on better-than-expected results in the last quarter of 2002. At the time, Gartner gave three possible scenarios for the global PC market, with growth as low as 1 percent in the event of war and as high as 12 percent if war was avoided. The adjusted forecast is within the range, but is "marginally more pessimistic in light of recent developments."
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