iPad's Success Leads Gartner to Revise PC Forecast Downward

Growing interest in the Apple iPad and other media tablets cited among the reasons for the new estimates.
Posted November 29, 2010
By

David Needle


The good news for PC makers is that research firm Gartner expects PC shipments to continue to boom along in 2010, on pace to total 352.4 million units for the year, a 14.3 percent bump up from 2009.

But the bad news is that those numbers represent a drop from Gartner's earlier estimate of 18.1 percent for the year. Gartner has also clipped its 2011 estimates downward.

One key factor driving Gartner's (NYSE: IT) revised forecast is the impact of Apple's iPad.

"These results reflect marked reductions in expected near-term unit growth based on expectations of weaker consumer demand, due in no small part to growing user interest in media tablets such as the iPad," Ranjit Atwal, research director at Gartner, said in a statement. "Over the longer term, media tablets are expected to displace around 10 percent of PC units by 2014."

Apple's (NASDAQ: AAPL) smash hit iPad sold three million units in the first 80 days after its April release and its current sales rate is about 4.5 million units per quarter, according to Bernstein Research. Those sales easily beat the one million iPhones sold in its first quarter and the 350,000 DVD players sold in the first year, the most quickly adopted non-phone electronic product.

Meanwhile competitors like Microsoft, HP, Research in Motion and others are scrambling to bring out iPad competitors, a development that's quickly establishing media tablets as a new category of computer hardware to be reckoned with.

"PC market growth will be impacted by devices that enable better on-the-go content consumption such as media tablets and next-generation smartphones," said Gartner research analyst Raphael Vasquez. "These devices will be increasingly embraced as complements if not substitutes for PCs where voice and light data consumption are desired. It is likely that desk-based PCs will be adversely impacted over the long-term by the adoption of hosted virtual desktops, which can readily use other devices like thin clients."

For 2011 Gartner forecast worldwide PC shipments will reach 409 million units, a 15.9 percent increase from 2010. But again, that projection is down from Gartner's earlier estimate of 18.1 percent growth for 2011.

While PCs will continue to be a volume IT and consumer necessity, Gartner says wider adoption is being impacted by a relative lack of innovation and compelling features.

"PCs are still seen as necessities, but the PC industry's inability to significantly innovate and its overreliance on a business model predicated on driving volume through price declines are finally impacting the industry's ability to induce new replacement cycles,” said Gartner research director George Shiffler. "As the PC market slows, vendors that differentiate themselves through services and technology innovation rather than unit volume and price will dictate the future. Even then, leading vendors will be challenged to keep PCs from losing the device 'limelight' to more innovative products that offer better dedicated compute capabilities."

Gartner also said in the near term, businesses and consumers are pulling back on purchasing PCs, as they look to rebuild their finances during a time of weak employment and a troubled economy. The research firm sees a slower PC replacement cycle going forward as users look to extend the life of the PCs they have and turn to other devices as their primary computing platform.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.




Tags: PC, iPad, iPad apps, Apple, tablets


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