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Consumers vote notebook in '04

Year-over-year gains of 36 percent in notebook unit sales at retail are helping 2004 get off to a good start in the United States.

Retail computer sales have gotten off to a relatively good start this year.

Overall, PC unit sales in the United States rose 23 percent year over year in January, according to market researcher The NPD Group. Breaking down the data shows that desktop PC unit sales rose 17 percent year over year, while notebook unit sales rose 36 percent.

Notebook sales have been booming at retail, thanks to buyers who have been replacing their aging desktops with laptops. As a result, desktop replacement notebooks, which are designed to replicate desktop performance with large screens and fast processors, have been selling particularly well, especially with first-time notebook buyers.

"Notebook (unit sales) are right in line seasonally, and the desktops did a little bit better" than seasonal expectations, said Steve Baker, an analyst at NPD.

For its part, January not only produced a year-over-year gain in units but also saw a sequential increase in average selling prices, Baker said.

The average selling price for a notebook was $1,370 during January. It was slightly lower on a year-over-year basis--January 2003's average selling price was $1,380--but it increased noticeably from December 2003's $1,334, Baker said. This means that people stepped up to more expensive machines in January.

Both desktops and notebooks logged sequential decreases from December. Desktop unit sales declined by 37 percent sequentially, while notebooks fell 49 percent, Baker said. Still, it is considered normal for unit sales to shrink from December to January, when the holiday season comes to an end. December is typically the busiest sales month for computer gear sold at retail in the United States.

Notebook inventory was slightly higher than normal during January. Retailers had about seven weeks of inventory during the month, slightly higher than the normal level of four to six weeks' inventory, Baker said.

But one extra week of inventory is no cause for concern, Baker said. Instead, it shows that manufacturers likely built extra machines and that retailers stocked them to guard against potential fourth-quarter part shortages and also to had extra on hand, were holiday sales to zoom ahead of expectations. The average price for a notebook, which would begin to fall if retailers were attempting to burn off inventory, has held steady in preliminary data for February, Baker said.

Thus, 2004 is shaping up to be a good year for computer makers who sell at retail, Baker said, but the real measure of success is still to come.

Sales in the second half of the year will have to measure up to 2003's relatively strong back-to-school and holiday sales seasons. If second-half retail sale numbers are able to match or beat 2003's numbers, "that'll give us a real indication of success, I think, because business just exploded for back-to-school last year," Baker said.

Many analysts assert that 2004 will be a good year for PC makers, with notebooks helping lead the way. Market researcher IDC, for one, expects notebook sales to continue to expand through 2007, as more and more families upgrade to the portable PCs or add them as second or third home computers.

Notebooks are expected to make up nearly half of all PC shipments in the United States and almost 40 percent of PC shipments worldwide by 2007, IDC said in January.

Meanwhile, both IDC and Gartner have forecast double-digit unit shipment increases for the worldwide PC market for 2004. Gartner's most recent prediction, released in February, predicts that worldwide PC shipments will reach 187 million units in 2004, a 13.9 percent increase from 2003.