Gartner: PC Unit Sales to See Worst Decline in History

The outlook for computer hardware sales—desktop PCs, servers and even notebooks—has grown bleaker for 2009 as demand appears to have dropped out of the market.

Gartner is now forecasting a drop of 11.9 percent in 2009 from 2008, the sharpest unit decline in history. Before now, the sharpest decline had been in 2001 when unit shipments fell 3.2 percent. The current forecast decline is almost three times the previous worst decline.

“The PC industry is facing extraordinary conditions as the global economy continues to weaken, users stretch PC lifetimes and PC suppliers grow increasingly cautious,” says George Shiffler, research director at Gartner, in a formal statement issued upon the release of the new forecast.

Last week Bernstein Research lowered its PC forecast for 2009 and now expects unit shipments to decline 7.3 percent for the year. That’s a significant deterioration from the firm’s November forecast of a 4.9 percent growth rate for PCs in 2009.

he recent earnings reports from Dell and Hewlett-Packard are cases in point. HP expects revenue for the full year to decline between 2 percent and 5 percent from the previous year, including the benefits of integrating its services acquisition EDS into the mix.

As for Dell, Brian Gladden, the company’s senior vice president and CFO, recently told analysts, “We cannot predict how deep or long this slowdown will be, though we’re planning on it to be protracted.”

Gartner says that both emerging and mature markets for PCs will suffer “unprecedented” market slowdowns.

“Growth in both emerging and mature markets will be driven by similar dynamics even if the precise impacts vary somewhat,” Schiffler says. “Slower GDP growth will generally weaken demand and slow new penetration, lengthening PC lifetimes will reduce replacements, and supplier caution will keep inventories at historic lows until confidence in a recovery eventually firms. The impact of reduced replacements will be especially acute in mature markets, where replacements are estimated to account for around 80 percent of shipments.”

Netbooks offer the only bright spot in an otherwise bleak forecast, with unit sales expected at 21 million in 2009, up from 11.7 million in 2008. According to Gartner, PC unit growth will be substantially boosted by continued growth in mininotebook shipments; excluding mininotebooks, other mobile PC shipments will grow just 2.7 percent in 2009.

But while this year looks to be a brutal one for PC sales, Gartner says that PC makers and their channel partners learned lessons during the 2001 dot-com bust and recession that have prepared them for survival in 2009. Those include the knowledge of how essential it is to invest in supply chains. And those investments give them better visibility into demand, says Gartner.