Worldwide PC Market Down, IDC Says

For the first time since the dawn of the personal computer, PC shipments are down across the world.

Global PC shipments declined by 2 percent in the second quarter of this year from the same period last year, IDC reported Thursday. That marks the first year-over-year quarterly decline.

The worldwide shipments were 7.2 percent lower than in the first quarter of the year, IDC reported.

A weak economy in the United States, soft consumer demand in Europe, flat shipments in Japan and slowing growth in key Asian markets combined to cause worldwide sales to dip to a quarterly total of 29.8 million units, IDC said in a statement announcing its report.

Dell was the only major vendor to increase its sales in the second quarter, with Compaq, IBM, Hewlett-Packard, and Fujitsu marking declines from last year's second quarter.

As the U.S. economy slowed from a more than decade-long expansion, PC shipments declined 8.1 percent from a year earlier and 1.3 percent from the first quarter. Meanwhile, shipments in Japan were flat in the second quarter, following a strong 2000 when they rose 30 percent. Corporate expenditure and consumer spending were weak there.

Stunted Growth Across the Globe

Even growing markets weakened. In China and India, consumer spending softened and government purchases declined. South Korea, where PC sales had been boosted by a government program, also showed slowing growth, as did Australia. Sales slowed in Europe, where growing commercial purchases only partly offset weak consumer demand, IDC says.

The Asia-Pacific market (excluding Japan), which has been a relatively bright spot for the industry, showed disappointing growth in the second quarter. A report on the region due next week is expected to show year-over-year growth of about 9 percent, says Kitty Fok, associate director for PC research at IDC Asia-Pacific.

"The PC market is still strong in Asia-Pacific because a lot of people are still looking for a first PC," Fok says. However, "it's actually slower than what we originally expected, particularly in China and Korea," she adds.

In China, many enterprises are waiting before making large investments in PCs. They're waiting to see the effect of China's expected admission to the World Trade Organization, for the release of Windows XP, or for the prices of Intel Pentium 4-based PCs to go down, Fok says.

In South Korea, a government-led effort to get families to buy PCs for Internet use has run out of steam, and the economy remains weak.

Most consumers who were attracted by the program have already bought a PC, Fox explains.

Moving Beyond the PC

The advent of non-PC Internet access devices--including handheld devices, set-top boxes, and Internet-connected home appliances--may also be affecting the Asia-Pacific PC market, Fok says. Although that market is still small, IDC expects it to surpass the PC market in size by 2005.

Still, the main reason for the worldwide slowdown was the weakness of the U.S. economy, she says.