International Data Corp. said two main factors caused it to revise forecasted growth in PC shipments downward from 20 percent to 17 percent, compared to year-ago results. The factors were: a sag in demand by corporate customers resulting from Y2K-related purchasing decisions and product shortages relating to the Taiwan earthquake in September.
However, IDC, which characterized the revision as "minimal," said that the consumer PC market is going to be red hot in the fourth quarter, with sales expected to increase 25.7 percent, and will help offset the slack from the corporate market.
The strength of the consumer market, IDC is predicting, will result in the highest yearly growth rates since 1995, in spite of the calamitous earthquake in Taiwan. IDC expects overall 1999 shipments to grow 22.6 percent over last year.
John Brown, research director for IDC, said the availability of graphic chips, chipsets and memory tightened due to the earthquake, which hampered product availability in the corporate sector. Strong consumer demand was fueled by a desire to get onto the Internet and lower prices.
PC makers that already have a strong presence in the consumer market, such as Apple, Gateway, Compaq Computer and Hewlett-Packard, should fare particularly well during the quarter; Dell Computer could make a strong showing as well with its recently introduced WebPC, which has a newfound emphasis on style and ease-of-use.
In fact, another report just released by IDC is predicting that differences in design, not technology, will increasingly be used to help vendors compete against one another for attention.
The older "pizza box" design of desktop PCs will become nearly extinct within five years, said IDC analyst Roger Kay in his report. "As the market matures and PCs become more of a commodity, vendors are searching for ways to differentiate their offerings, and they will increasingly do so by way of style rather than with technology," he said in a statement.
Small "tower" designs that sit vertically on a desk, such as the new WebPC, and all-in-one systems with flat panel displays, such as those from Sony, NEC and Gateway, will be the norm in the consumer market, rather than the exception.
Regardless of what shape the PC of the future will come in, demand should remain strong next year. In 2000, IDC projects unit volume growth of 18.3 percent over 1999 as commercial demand picks up and the shortages of LCD panels begin to ease up.