Tough times ahead for PC manufacturers

30 November 2004 – Palo Alto (CA): Top PC manufacturers such as Hewlett-Packard (HP) and IBM may be forced to abandon the market in the next three years as consolidation takes hold, says research firm Gartner.

The analyst group said that although most PC manufacturers have enjoyed double digit growth in recent years, the future is not so rosy, since the end of the replacement cycle and the effect of emerging markets will make competition fiercer.

Research VP for Gartner’s Client Platform’s Group Leslie Fiering said that vendors who have not yet attempted to diversify into related markets, such as consumer electronics, may attempt to do so. Others, she said, may attempt mergers with rivals to improve margins.

Gartner highlighted the PC divisions of HP and IBM as prime targets for being spun off, if the parent companies consider them to be impacting too negatively on company profits.

PC unit growth is expected to average 11.3 per cent annually from 2003 to 2005, but this figure will lower to 5.7 per cent annually from 2006 to 2008, predict the analyst group, during which time emerging markets will account for 60 per cent of market growth.