iSuppli: PC Forecast Better on Mobile Computers

iSuppli Corp. has boosted its growth forecast for PC unit shipments in 2005 to 10.3 percent, up from 8.2 percent previously, as stellar first-half sales and soaring demand for mobile computers have brightened market prospects.

Total PC shipments in the first half of 2005 amounted to 100.8 million units, up 10.5 percent from 91.3 million units in the first half of 2004. Historically, PC shipments in the first half amount to 46 percent to 48 percent of the annual total. Thus, we can safely expect annual growth in the range of 10 percent to 11 percent.

In light of this, iSuppli now predicts 2005 PC shipments will rise to 210.98 million units, up 10.3 percent from 191.2 million in 2004.

The growth driver this year has not been desktop PCs, whose unit shipments rose a relatively mild 7.4 percent in the first half of 2005 compared to the same period in 2004. Rather, the growth has been generated by entry-level servers -- and particularly by mobile PCs -- whose unit shipments have risen by 17.1 percent and by 19.5 percent respectively in the first six months of 2005 compared to the same timeframe a year earlier.

iSuppli’s previous forecast for mobile PCs predicted unit growth of 11.8 percent in 2005. However, with mobile PC shipments up nearly 20 percent in the first half, growth this year should easily exceed this forecast -- barring a market collapse.

For a number of quarters, Intel Corp. has mentioned it is seeing strong sales momentum for mobile PCs. With such comments coming from an industry bellwether like Intel, iSuppli believes mobile PC sales are unlikely to fall off during the remainder of the year.

As a result, iSuppli has raised its mobile PC growth forecast for 2005 to 19.7 percent, with shipments rising to 54.6 million units, compared to 45.6 million in 2004.

With such strong performance in the mobile PC segment, the question arises: Where is all this demand coming from? The answer to this question is particularly interesting, given that we are at the trailing edge of a recent corporate PC purchasing cycle.

Part of the reason for the rise is a rule of statistics that dictates that a smaller market can generate significant percentage growth more easily than a larger market can. In absolute terms, the mobile PC market is only 36 percent the size of the desktop PC market, based on Q2 data. Therefore, achieving higher growth rates requires a smaller number of new shipments.

But where are these new mobile-PC buyers coming from?
iSuppli believes that despite the petering-out of the corporate buying cycle, business users who have a justification for buying a mobile PC now are doing so, or will very soon.

On the consumer side, the mobile PC is a relatively new platform. This is because only recently have the price and functionality of mobile PCs come into line with the requirements of the consumer market. Consumers typically have bought desktop PCs because their pricing and functionality were a suitable match for the requirements of the buyer.

However, due to price reductions, the consumer now is able to consider the mobile PC to a greater extent. This is not to say that the consumer market is the sole reason for the growth currently being witnessed in the mobile-PC segment. However, the mobile consumer is having a sizeable impact on the market.

by Matthew Wilkins, iSuppli Corp. -- Electronic News, a sister publication of EM Asia

Matthew Wilkins is a senior analyst covering the computer market at research firm iSuppli Corp., based in El Segundo, Calif.