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Struggling economy puts the brakes on PC sales growth

Struggling economy puts the brakes on PC sales growth
BY Oregon Small Business Associationkeyboard_scaled

PC sales growth in the U.S. continues to take a beating at the hands of the economic recession.  Yet, one glimmer of hope remains:  laptop computers.

Dell Computer recently announced declining quarterly profit and revenue results.  Hewlett-Packard also announced similar weak results.  And Intel’s four-quarter long growth streak has ended with the world’s largest chipmaker seeing a decline in both sales and market share.
Shipments of PCs during the first quarter were down 7.1 percent from a year ago, according to the research firm IDC.  And it may not be totally behind us: IDC is predicting roughly 8 percent declines in growth for the second quarter.

Low-cost portables, like Netbooks, continue to be the bright spot for many PC makers and helped to stem the overall decline worldwide.  And laptop computer sales outpaced desktop PC sales for the first time last year.
The ratio of laptop PC sales to desktop PC sales is expected to continue to widen this year with 63 percent of the computers sold in 2009 expected to be laptops, according to the Consumer Electronics Association (CEA).  It said that in 2005, the ratio of desktop PC unit sales to laptop PC unit sales was 58 percent to 42 percent.
However, portables will increase sales, not revenues, projects IDC.
In the non-Windows world, Apple continued to increase its market share, moving to number four in the U.S. market, displacing Toshiba, according to The New York Times.
“One unknown for Apple: How it will compete with the newest wave of notebooks from PC makers—small, cheap, less powerful ‘netbooks,’ which are catching on with geeks and some business travelers. Netbooks cost around $400-500, while Apple’s cheapest laptop starts at $1,000 and has a large display,” states The New York Times.
Other noteworthy PC industry trends, according to Hoover’s:

Consolidation.  Consolidation has altered the landscape of the PC market and the computer hardware industry as a whole in recent years. In the personal computing segment specifically, two companies—Dell and Hewlett-Packard—dominate.

Continuing Productivity Gains.  Automation and redesign of manufacturing operations have increased industry productivity by more than 100 percent in the last five years. Industry employment fell 30 percent, while output rose 50 percent. Productivity gains have been a major factor in the steady fall of computer prices.

Off-Shore Design Facilities.  Since many U.S. manufacturers have established manufacturing operations off-shore, the design of new products and technologies is occurring abroad as well.

More Industry-Standard Platforms.  The server market has shifted from proprietary hardware and operating systems to standards-based architecture. The broad acceptance of open standards allows the hardware to more easily absorb new technical innovations.

Growth of Alliances.  More manufacturers are developing alliances to offer a wider range of products and services. Examples include Dell and EMC announcing a co-branding agreement to market joint products, and IBM and Network Appliance Corp. announcing a co-branding agreement back in 2005;