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Consumers wary of replacing PCs; companies aren't

"In Taiwan we are also seeing slow growth. It's the same pattern as North America more or less."

Cynthia Chyn, deputy managing director of the Market Intelligence Center

Companies in North America are beginning to replace older computer equipment, but ordinary consumers are still wary of shelling out for new computers before economic growth is more solid, US-based research firm International Data Corp (IDC) reported on Tuesday.

Firms in the US are recording their first increases in information technology (IT) spending since the end of 2000, "as growth in corporate profits and pent-up demand for system upgrades and replacements begins to impact technology sales," the report said.

But end-users rely on economic confidence, and that has yet to return to a market that "is inhibited by a persistent atmosphere of caution and hesitancy," IDC concluded after a survey of 500 end-user organizations.

Less than a third of IT departments expect to get enough funding to buy the new equipment they need, the survey found.

"It's all about the infrastruct-ure," said Stephen Minton, director of Worldwide IT Markets at IDC. "The mood of cost-control and caution persists, but alongside a realization of the urgent need for infrastructure upgrades."

"The survey shows that only a small number of IT departments have been allowed to exceed their IT budgets over the past year," Minton said. "For the [chief information officer], the difficulty of winning funds for projects which are not considered mission-critical will remain challenging."

A local research body agreed.

"It's about time for corporate computer replacement," said Cynthia Chyn (秦素霞), deputy managing director of the semi-official Market Intelligence Center (市場情報中心).

"But US consumer confidence is still not so strong. Everyone in the industry is looking for the replacement cycle to return," she said.

In 1999, corporations and individuals replaced their computers on a massive scale to beat the Y2K bug expected when the clock ticked over into the new millennium. Traditionally, computers are replaced every three to four years, but in fact the cycle has been slow to kick in this time for desktop computers, Chyn said.

"We are actually seeing quicker replacement of notebook computers as there have been bigger changes in notebook technology, such as wireless LAN [Internet connections]," she said. "In Taiwan we are also seeing slow growth. It's the same pattern as North America more or less."

Last month analysts at another US research firm, Gartner Inc, said that "the anticipated replacement cycle has been slower than expected. Selective replacements were apparent in the first half of 2003, but a now elongated general cycle will not be evident until early 2004."

Gartner's analysts have also seen more interest in new mobile technologies, particularly the Centrino package of chips from Intel Corp that allows computers to connect wirelessly to the Internet much more easily than before.

"Within the PC industry, the mobile segment will continue as one of the major drivers of growth," said Gartner analyst Kiyomi Yamada.

"Notebook prices and performance improvements are expected to continue as notebooks [as powerful as desktop computers] become more widely available and Centrino products are priced to appeal to non-business markets," Yamada said.
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