Pricing pressure drives up notebook sales

The quest for a more mobile workforce continues to be the driver of the UK PC market, according to the latest figures from analyst firm IDC.

Overall PC shipments for the first quarter 2008 increased by 14.3 per cent year on year, with the notebook market growing by a healthy 41.8 per cent.

IDC attributed the mobile growth to a number of factors including renewals, further expansion of the installed base to new buyers and multiple-equipment purchases.

Consequentially desktop sales continued to decline, particularly in the consumer and SME sectors, as end users replace their ancient tower/monitor/keyboard combos for notebooks.

However the rise in shipments come at a cost. Particularly to the retail market, which is suffering from shrinking margins as prices continue to plummet, IDC claimed. The analyst highlighted the case of DSG which announced plans to close 77 of its Curry Digital stores. But on the plus side, the demand for notebooks has prompted players such as Dell to enter the retail space, and also Lenovo is expected to follow suit.

Lucie Jichova, research analyst for IDC’s EMEA PC research group, said: “Demand for notebooks, stimulated by fierce vendor competition and aggressive pricing, will remain a key engine for growth throughout the year. Economic pressure will continue to drive cautious spending behavior, but the arrival of low-cost ultraportables, increasing traction of telco bundles, and mobile solutions in the business space, will maintain strong momentum in the notebook market in the second half of the year."

Corporate renewals gained momentum in Q1, and healthy demand for both desktops and notebooks is expected to continue throughout the year, despite the current economic concerns. However, some sectors, such as financial services, are likely to postpone their IT investments. In the education market, some projects are likely to be geared towards mobility, taking advantage of the new low-cost ultraportable offerings.

From a channel perspective, increasing momentum will surround the cooperation between PC vendors and telco operators, tapping into new sources of revenue, as the deals that combine Internet subscription with a free notebook are likely to appeal to consumers that have not owned a PC before

According to IDC’s predictions, notebook shipment levels are set to show growth levels of 35.5 per cent in 2008, while desktop volumes are expected to sink further, with an annual decline of 8.3 per cent.

"Demand levels for desktops in the SME and consumer segments remain lacklustre, added Jochova. “In order to maintain sales volumes of consumer desktops, PC manufacturers will increasingly focus on home entertainment solutions and gaming machines. Consumers are going to benefit from attractive notebook offers as competition among vendors in the retail channel intensifies. Furthermore, the rising availability of deals that bundle Internet subscription with free notebooks will create further pressure on other channels to bring prices down."