PC Slowdown – The Ripple Effects

IDC predicts the number of computers shipped worldwide will increase by 3.8% in 2009, with the value of all shipments expected to decline by 5.3%.

The US market is expected to show negative growth – 3% lower than 2008. In this mix, netbooks will keep the volume up a bit but values will slide as buyers go for value rather than glitz. Consequently, margins will be squeezed with profits taking a dive.

This is not entirely a surprise considering the absolute mess economies across the globe are experiencing, and if you believe the worst is yet to come, take these forecasts as best case. Also take into account what the possible secondary effects will be on someone who supplies the dominant PC Operating System.

A lot of Vista’s growth is due to shipping with new PCs – many companies have been reluctant to upgrade from XP to Vista considering the impact on legacy hardware, added equipment costs and user resistance. However, the shift to netbooks has kept XP alive as Vista is NOT the OS of choice for low-powered netbooks.

Microsoft isn’t helping much by accelerating the release of Windows 7 – give me a break! Why upgrade now and become obsolete most likely within a year!

With lower growth and a shift to more XP netbooks, Vista’s growth should be crimped perhaps more now than expected. As the cost to consumers is not limited to just the OS upgrade – more RAM just one factor – the upgrade impetus will be further constrained as consumers pull the rug from non-essential expenditures.

Conversely, I would expect Ubuntu to get a more favorable look, although don’t expect to see wide-scale linux adoption – still “a bridge too far”. The ripple through the hardware suppliers should also lead to some nice price decreases for things such as RAM – a LOT of end-user pricing is “at the margin” and the impact of a slowdown gets magnified.

I’m not one to revel in what will be a very painful recession, but don’t be surprised to see major price declines for electronics in the coming year and expect some names to disappear – the bargain you get next year may turn out to be an orphaned product.


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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