Gartner Forecasts: PC Shipments Down, Tablets Up

Gartner (IT) has cut its estimates on PC shipments, saying tablets are increasingly serving as substitutes for PCs for light data consumption. The firm said worldwide PC shipments were on pace to reach 352.4 million units this year, up 14.3 percent over last year but down from projected growth of 17.9 percent just two months ago. Similarly, worldwide PC shipments in 2011 are expected to hit 409 million, a 15.9 percent increase over 2010 but down from an earlier estimate of 18.1 percent.

The rapid revisions suggest that the PC market, while still growing, is in flux as it deals with demand for tablets. Just last month Gartner reported that PC sales in the third quarter grew by just 7.6 percent in what is normally a strong period. Gartner said over the long term, media tablets are expected to displace around 10 percent of PC units by 2014. The research firm said PC manufacturers, which have relied in the past on cutting prices and pushing volume, will need to add more services and technology innovation to stay competitive.

Meanwhile, Citigroup (C) on Monday forecast that 35 million tablet computers will be sold in 2011, while FBR Capital Markets (FBCM) said it expects 70 million tablets to be sold next year, with 40 million of those coming from Apple (AAPL). FBR estimates that every 2.5 tablets sold negates the sale of one PC.

A Bevy of Influences

It's not just the growth of tablets that's threatening PC unit sales. Gartner cited five other dynamics challenging the PC industry:

Emerging markets will drive growth, while mature markets will face mounting challenges. Emerging markets will account for more than 50 percent of total PC shipments by the end of 2011, with many of those consumers potentially leapfrogging directly to alternative devices.

Consumers are postponing purchases in the face of economic uncertainty. That has led to a steep downgrade in shipments in mature markets.

Emerging devices such as tablets are growing more PC-like, making it easier for consumers to choose them over PCs, especially mini-notebooks. They're especially popular with people who want more dedicated entertainment and instant-on features.

The life cycle of PCs is lengthening as consumers supplement their computing needs with emerging devices.

The growth of virtual desktops, while not expected to be a major factor until 2012, will also lesson the need for new PC units as consumers run them on refurbished PCs and thin client machines.

PCs aren't going to go away soon, but tablets are showing that they serve a need and can lessen the computing workload of a traditional PC. With Android (GOOG) tablets expected to jump into gear next year, the challenge is for PC makers to find ways to keep their traditional computers attractive. Apple has done it with the Macbook Air. Now it's up to others to push the edge or risk losing even more unit sales to tablets.

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