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IDC Foresees Healthy Worldwide PC Market

Despite weakening demand in the U.S., the future looks brighter for computer manufacturers than some might expect. IDC Thursday forecast a healthy worldwide PC market with shipments expected to reach 40.15 million units in the fourth quarter, representing 19.6 percent growth over the same period last year and 19.8 percent sequential growth from third quarter 2000.

"Although it's clear consumer demand in the United States is weakening, buying in other regions remains strong," said Loren Loverde, director of IDC's Worldwide PC Tracker program. "PCs remain the dominant means of accessing the Internet, and a lot of people out there are still buying PCs to get online. The portables segment is also strong in all regions, boosting sales in both consumer and commercial markets."

IDC said consumer spending in the U.S. was strong in the third quarter but early warnings from retail and direct channels indicate a soft fourth quarter for the consumer market. The research firm predicted that U.S. consumer demand will remain depressed for two to three quarters before accelerating again.

"Even though the fourth quarter consumer market is weak, the U.S. commercial market is slowly warming," said Roger Kay, manager of desktop PC hardware at IDC. "This up-tick is primarily due to two factors: The Windows 2000 upgrade cycle is finally beginning to kick in, and PCs bought early (1997 and 1998) for millennium compliance are reaching the end of their life cycle."

IDC's revised forecast calls for year-on-year fourth quarter total unit growth of 15.8 percent and sequential growth of 11 percent.

IDC said the picture is reversed in Western Europe, where the consumer sales appear healthy while the corporate segment is to blame for lowered estimates. The firm said lower-than-expected uptake of business IT investment in the second half of 2000 led it to lower fourth quarter expectations from nearly 19 percent to 15.1 percent year-on-year.

However, in Asia/Pacific (excluding Japan) looks very bright according to IDC. The firm said that market continues to grow at an accelerated pace, with year-on-year growth of 42.7 percent in the third quarter, beating expectations by 6.5 percentage points. The rosy sales outlook is being driven by continued success of local vendors, growth of affinity distribution models, a thriving portables market and strong consumer demand, according to IDC. The firm is now predicting fourth quarter shipment growth of 33.4 percent year-on-year.

Japan, too, is looking up. IDC revised fourth quarter growth projections upward to 29.4 percent year-on-year following a slower-than-expected third quarter. IDC said strong consumer demand from repeat and first-time buyers and recovering business investments are driving the market.

In addition, IDC said the portables market had a particularly strong showing in the third quarter, with worldwide shipments increasing 33 percent year-on-year. The U.S., Western Europe and Asia/Pacific all strongly outperformed expectations, IDC said. The firm added that portables seem to be gaining steam as users give weight to the advantages of mobility over resources for applications. IDC expects portables shipments to grow nearly 32 percent worldwide in the fourth quarter.

Still, IDC said it has revised its forecasts for total PC shipment growth, predicting it will slip to 16.6 percent worldwide in 2001, off from 18.8 percent growth in 2000. It added that worldwide growth will probably slow in the longer term as saturation increases in both the business and consumer markets and growth in emerging markets moderates.

IDC said globally positioned vendors will have the advantage and be well positioned to gain market share, especially those with strength in Asia/Pacific, portables and consumer segments in emerging regions.

"Ranking global vendors that can benefit from these growth factors include Compaq, Del