PC Sales Expected to Soar in 2004

By Ron Miller

PC sales are expected to jump nearly 14 percent this year as U.S. businesses upgrade old machines and consumers snap up PCs that support wireless and digital media, according to a new forecast from Gartner Dataquest.

The research group expects PC shipments to top 187 million units in 2004, a 13.9 percent increase over 2003. The worldwide PC market should enjoy double-digit growth all four quarters in 2004, with especially strong growth in the business market in the United States.

Businesses in the United States will replace older PCs, although this is predicated on the continuing improvement of the U.S. economy.

“As the economy improves, many U.S. businesses will need to replace PCs that were bought back in 2000,” Kiyomi Yamada, a Gartner analyst wrote in the report. “However, we do not expect stronger sales into the business segment until the recovery consolidates later in the year.”

Gartner analyst George Shiffler, who contributed to the report, cautioned that growth won’t last once businesses complete the current replacement cycle.

“We are going to get a burst here. 2004 will be a pretty good year, certainly better than we’ve seen recently, because we’ve got this replacement cycle under way and that will continue to be a driver through 2005, but after that we will start to see growth tail off,” Shiffler said.

Elsewhere, businesses in Europe, along with the Middle East and Africa, have been buying more PCs. According to the report, Europe sales have been strong due the strength of the Euro against the U.S. dollar, providing additional buying power for imported goods.

“We expect Eurozone businesses will continue to enjoy enhanced spending power throughout 2004, so long as the dollar remains weak against the Euro,” Shiffler said.

Home buyers looking to upgrade to mobile PCs equipped with Intel’s Centrino processors will also help boost PC sales throughout this year.

“There is the whole spread of wireless technology and people are becoming aware of
that — being able to walk in with a notebook into Starbucks and boot up and connect up. The whole push for Centrino has gotten people thinking, ‘Hey this is great,’ and they want to be a part of it,” Shiffler said.

The proliferation of digital devices such as cameras and MP3 players is also boosting home sales. Shiffler said PCs are becoming a consumer electronic device that acts as a central storage and a way to process the data.

The report warns, however, that several factors, such as continued slow jobs growth in the United States, a weakening of the Euro, or shortages of LCD screens and memory chips could slow the projected growth or push back the growth cycle.

“There is the job growth issue, but my expectation is that is a very near term issue, as in next quarter,” Shiffler said. “By the second, and certainly third quarter, we should begin to see pretty strong employment growth. That will help drive this replacement cycle. Once businesses get up and running and start hiring again, that’s going to move into full swing.”

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