December 3, 2004 12:35 PM PST

Big Blue news a sign of PC market's graying temples

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March of this year and resorting to massive layoffs.

Only Dell, considered by most to be the healthiest of the PC makers, was able to weather that storm, while showing consistent quarterly profits.

Though sales bounced back in 2003, and are expected by researcher Gartner to hit about 180 million units this year, the outlook for the future is cloudy at best, analysts say.

Earlier this week, Gartner predicted that as many as three of the top 10 PC manufacturers may be forced out of the global PC market by 2007 as demand for PCs falls off after 2005. Gartner said in its report that IBM, and also HP, could be forced to spin off their respective PC businesses.

Where it stands
Right now, Dell, HP and IBM rank as the world's top three manufacturers in unit shipments, while Fujitsu, Fujitsu-Siemens, Toshiba, NEC, Apple Computer, the Lenovo Group and Gateway rank fourth through 10th.

Gartner predicts an annual rise in unit shipments of 11.3 percent and annual revenue increases averaging 4.7 percent between 2003 and 2005. Despite that relatively profitable period, 2006 will bring tougher times as demand for new PCs slows and competition between vendors increases, the research company said.

Many businesses and consumers will have replaced their oldest computers by the end of 2005, completing the latest PC replacement cycle. With owners typically replacing desktops every four years and notebooks every three years, there should be a drop in demand between 2006 and 2008. That period will see average annual unit shipment and revenue growth slow to 5.7 percent and 2 percent, respectively, Gartner predicted. So-called emerging markets such as China will deliver the best growth during that time but will be unable to offset slack demand elsewhere, the Gartner report added.

If the predictions hold true, the 2006 to 2008 period will make for better times than 2000 to 2002. But lower revenue and unit shipment growth in 2006 through 2008 will be just as traumatic for manufacturers as it was in years prior.

"The bottom line here is that the vendor landscape will look very different in the next couple of years," Leslie Fiering, an analyst with Gartner, said in an interview about the report.

Gartner isn't alone in predicting slower PC market growth in the 2006 to 2008 time frame. IDC also has warned of even slower, single-digit growth rates after 2005.

"It looks like the unit growth from 2006 to 2008 is going to be in the 8 percent range...driven by nondeveloped markets and a steady replacement market in the developed world," said IDC's Kay.

The fittest
Still, there are several likely survivors. Dell--which can use its relatively low operating costs to reduce prices and still profit--is in the best

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IBM laptops
The dummys should have kept their laptops. No one can come close to the quality. I know the word quality is not used much anymore, but IBM sure used it in their laptops.
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