Twenty-Five Years, One Billion PCs

Industry researcher Gartner Dataquest said the one billionth PC shipped in April 2002, while flat growth of late is expected to pick up pace, as broadband penetration increases and emerging markets adopt PCs at feverish rates.

While it took 25 years for one billion PCs to ship, Gartner predicts the two billionth PC will ship in just six years’ time. Gartner banks on the industry overcoming some tough recent times by looking to countries like China.

The catch for the PC industry, in Gartner’s prediction, is that skyrocketing growth, above all, has been fueled by the brutal price wars that have driven down the costs of PCs. Gartner Dataquest analyst Martin Reynolds credits Dell with revolutionizing the industry, paving the way for PCs to become a mass-produced commodity and leading the way to the industry consolidation that produced the HP-Compaq marriage.

“The PC industry has evolved into an intensely competitive environment,” Reynolds said. “Companies that struggle today would be ferocious and unstoppable competitors in other businesses.”

While the PC industry’s long-term outlook might be rosy, it still has a raft of short-term problems to deal with. Earlier this year, Gartner published research showing 2001 was a year to forget for the industry, with global economic stagnation causing a decline in year-end shipment totals for only the second time in 25 years.

Worldwide, 128 million PCs were shipped in 2001, down 4.6 percent from a year earlier. In the United States, PC shipments dropped 11 percent, to 44 million units, as consumers put off buying new computers and businesses cut deep into IT budgets.

With economic conditions not rapidly improving this year, the worldwide PC market has remained flat, according to Gartner’s first-quarter market analysis. In the United States, PC sales picked up 2.3 percent from last year’s first quarter, giving a glimmer of hope that demand would return to its normal acceleration rates.

The increased demand was largely driven by the consumer market, especially in the demand for mobile PCs, according to the researcher. Meanwhile, the corporate market has remained sluggish, with Gartner analyst Charles Smulders saying the large-accounts market showed no sign of growth, causing an uncertain outlook for the market in 2002.

Reynolds pegged continuing to lower costs, which have come down enough to put a computer within range of the budgets of most American households, as an important factor for the PC industry to return to sharp growth rates. But the key, he said, is untapped markets abroad: emerging markets with much lower per capita income.

“Lowering costs will be the greatest challenge for the industry in the next six years,” he said.

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