Electronic Design

PCs Should See Unit, Revenue Growth

The PC may no longer be the hottest product in the electronics industry, but despite a prolonged slowdown in sales, the market will start picking up this year as corporations begin mass replacement of their older systems.

Overall PC market unit growth in 2003 will amount to 10.5%, iSuppli predicts, while revenues will rise 13.6%. While that growth still will be slower than the historical average, a double-digit rise in sales will be a welcome relief after the market contracted in 2001 and mustered only weak growth in 2002.

The PC market has lost some luster in recent years, as growth has slowed and more attention has focused on other electronic products. Even during the recent economic downturn, consumers have spent robustly on electronic products like digital still cameras, DVD players, and home theater systems. Consumers have obviously found these products to be more compelling purchases than new PCs.

PCs will return to growth mainly because many companies over the past two years have extended their PC replacement cycles, stretching the life of their computers to four and even five years, up from three years previously. Companies have been driven to do this by the economic downturn and by the fact that their existing PCs remained capable of performing the tasks demanded of them.

The extension of PC lifespans seemed like a prudent strategy to keep expenses under control. However, the benefits gained by lengthening the PC replacement cycle soon will be nullified by rapidly increasing IT support costs if these machines are not replaced during the next year, iSuppli Corp. believes.

But iSuppli also believes that to bring a return to the historical high growth rates in the PC market, more than just corporate replacement will be necessary. It will require real innovation, not just microprocessor clock speed increases, to make PCs a useful and compelling purchase to more of the world's population—and to bring back the glory days of fast growth.

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