RealTime IT News

PC Crystal Ball Points to 2004

Could 2004 be the year IT happens? It might if you look at some indicators in the hardware sector.

A new Deutsche Bank forecast this week for the PC hardware market says that there may be just slightly better times ahead.

The financial group Thursday published revised estimates of unit growth in PC sales in 2003, nudging its figure up a tenth of a percent to 4.7 percent. Conceding that demand for PCs was still "somewhat anemic," while visibility into corporate and consumer demand was cloudy, Deutsche also increased its estimate of next year's unit growth to 6.5 percent, up from 5 percent; it estimated a 5.5 percent increase for 2005.

Deutsche said it is betting on improved user demand and the need to replace equipment.

"Demand trends appear to be following normal seasonal patterns, signs of stability are beginning to emerge (particularly in the U.S.), the SARS epidemic, which has primarily affected the clone market in China/Asia-Pacific, seems to be abating, and certain economic data shows potential underlying strength," Deutsche Bank said in its briefing.

While Asian production levels remain as expected, a one percent rise from May to June, Deutsche said channels were clean. A pickup in DRAM prices from last month was seen as good news. Deutsch now projects the blended 256 MB DRAM price to increase to around $4.30 the next quarter, up from the previous estimate of $3.90 in for the second quarter of this year.

One doesn't have to have too much foresight to know that something is in the air. Recent announcements by Dell Computer and Hewlett-Packard at the CeBIT show in New York earlier this month and Apple Computer's new PowerPC G5 previewed this week are clear indications that vendors are anticipating spending next year.

Roger Kay, an analyst at research firm IDC, was even more positive about the outlook for next year. IDC's estimate for 2004 is 10.3 percent, with an expected 6.3 percent growth in sales this year. He called this year's estimate "a pretty easy compare."

"This year is still pretty weak and I have no reason to think it will change," Kay told internetnews.com.

Framingham, Mass.-based IDC sees the lion's share of pent-up demand coming from business.

In a recent study, the analyst firm found, "corporate refreshment has been delayed for some time, and that's created some pent-up demand." With corporate sales representing more than half the worldwide market, he says, and the economy on a slight up tick, "There's enough positive stuff to give us a more positive outlook in the intermediary period versus the short term."

Kay pointed out that new consumer products like notebooks, tablets and media centers are bringing in some interest - and some sales growth. "But their high sales growth is starting from small bases," he said. "It doesn't start bailing out the IT industry until you see sales in the millions."

That's a ways off, Kay said, "but 2004 could be the year it happens."

Kay also acknowledged IDC's higher 2004 projection also could be due to its knowledge of the strength of the Asian market. He said, "We have a lot of feet on the street in Asia."