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Commentary: What will drive PC maker profits in the future?

Asia and Latin America will become more important to PC makers as the U.S. market begins to feel the impact of saturation in large accounts and the home market.

By Charles Smulders, Gartner Analyst

Asia and Latin America will become more important to PC makers as the U.S. market begins to feel the impact of saturation in large accounts and, to a lesser extent, in the home market.

Provisional results show

See news story:
Overseas markets drive PC growth in second half
that slower growth in the business market resulted in a poor quarter for Western Europe's PC market. Once again, saturation is the issue.

As a region, Western Europe is less important as an absolute growth opportunity. However, the United States and Europe, which account for almost 60 percent of worldwide PC shipments, cannot be ignored--even with a greater focus on emerging regions.

The industry faces the challenge of persuading users in more saturated markets to replace their systems more frequently. In the large-accounts market, PC vendors must put together a compelling value proposition for IT decision makers.

The new, scaled-down PC may represent that value proposition. These products weigh less than 11 pounds, have no expansion slots and may (or may not) be legacy-free.

These products, when combined with Windows 2000, will appeal to IT decision makers because their total cost of ownership is lower than the current desktop PC. Gartner expects these small PCs will become more important in the fourth quarter.

The downturn in the home market--where Gartner research indicates that approximately 58 percent of U.S. homes have a PC--is a not a result of buyers spending money on PC alternatives.

Last year's rebate offers in the United States made PC technology more affordable to lower-income households. Those new opportunities were filled up quickly and brought growth forward from 2000 into 1999. The market is paying for this in 2000.

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.