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PC outlook worsens
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September 7, 2001: 3:15 p.m. ET
IDC lowers its growth forecast for this year and next
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NEW YORK (CNNfn) - The personal computer market is expected to be weaker this year and next, with revenue declines expected for both, according to the latest data from technology research firm International Data Corp.
IDC's latest PC forecast is for unit shipments to decline 1.6 percent in 2001 from 2000. In June, IDC had forecast 5.8 percent year-over-year growth in PC shipments this year.
On the revenue side, IDC now is forecasting a 10.8 percent decline in 2001 from 2000, which also is below the firm's previous forecast.
IDC said the declines reflect weakness in all regions, but especially in the U.S., which represents 34 percent of the total market. For the U.S., IDC lowered its unit-shipment forecast to a 13 percent decline from a 6.3 percent decline.
For 2002, IDC now is forecasting total PC unit shipments to rise 6.9 percent, compared with its recent expectations for growth nearer 12.2 percent. Revenue in 2002 is expected to decline 2 percent, which compares with a recent forecast for 2 percent growth.
The latest data reflect continued weakness in the PC industry, which has prompted a fierce pricing war and a flurry of restructuring and consolidation moves.
Just this week, Hewlett-Packard agreed to acquire Compaq in a move aimed at bolstering each company's ability to compete in an increasingly harsh market environment.
Last month, Gateway, the smallest of the U.S.-based PC makers, announced a major restructuring plan under which it will cut 25 percent of its global workforce.
Industry observers have cited worsening economic conditions, cutbacks in corporate spending and the lack of a compelling reason for consumers and businesses to upgrade their existing systems as the primary factors driving the downward trend.
Analysts at IDC say a minor recovery is possible in the second half of 2002 owing to technological improvements and lower prices, but its forecast model assumes continuing weakness in the U.S. economy in 2002.
Most industry observers agree that the planned Oct. 25 release of Windows XP and Microsoft's planned aggressive marketing campaign for the new operating system could spark some interest in the PC platform. However, few are looking at the new operating system as the savior of the PC industry.
IDC said Windows XP will likely have only a modest positive impact on sales in the fourth quarter and noted that a hardware upgrade cycle is unlikely to occur in the next 12 to 15 months.
PC makers' stocks were mixed in afternoon trade Friday. The Goldman Sachs computer hardware index was a fraction of a point higher at 209.43. 
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AN INDUSTRY IN TRANSITION
