PC Sales – The Good, The Bad and The Ugly

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The PC Market is looking a lot like an unfolding disaster.

The Good:

If you are buying any PC product this year, I think in a few months you will see prices dipping to fire-sale levels. Consumers will benefit.

The Bad:

PC Manufacturers will be hurting big time this year. Gartner (a technology consulting firm) is forecasting unit sales to decline 12% this year to 257 million units. The mix in these numbers is really telling:

  • Desktops are predicted to drop a stunning 32% from 2008 to 101 million units
  • Mobile PCs are forecasted at 155.6 million units, up 9% over 2008
  • Netbooks the bright spot –  forecasted at 21 million units in 2009, up almost 80% over 2008
  • Regular notebooks forecasted up almost 3%
  • Emerging markets are forecasted to decline of 10% while mature markets decline 13%

Gartner also indicated that replacements account for an estimated 80% of sales in mature markets – with excruciatingly bad business conditions, replacement rates can quickly fall to rates that can drop the forecast into some really gloomy territory for PC manufacturers. I would not be surprised to see forecasts in a few months of a 20-25% drop in units.

The Ugly:

Chipmakers Intel and AMD are in for a bumpy ride – Gartner forecast chip sales to decline 24% this year – and that is probably optimistic.

Intel can weather the storm considering its relatively healthy financials and great placement in the netbook market with the Atom CPU.

AMD is quite another story. You will see about a $1 billion cash infusion due to the manufacturing spinoff to Abu Dhabi, so the first quarter’s results should be better than one might expect. However, this is a one-trick pony; after the first quarter, the market’s ugly dynamics will take hold and financial results will get a big hit.

AMD is making some splash with its 3-core-can-be-four-core CPUs among the fan-boys, but that’s not enough to sustain a business long term. AMD is running out of rabbits – with the manufacturing spinoff, AMD has sacrificed its long-term profitability to the gods of economic survival. The “Foundry Company” as a separate for-profit company is going to take margin from AMD – period.

The hard truth is that AMD is looking more like a bankruptcy than before, and while it would be a disaster for consumers, don’t be surprised to see a severely restructured AMD by 2010.

About Joe Citarella 242 Articles
Joe Citarella was one of the founders of Overclockers.com in 1998. He contributed as a site administrator and writer for over 10 years before retiring. Joe played an integral part in building and sustaining the Overclockers.com community.


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