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IDC: Public sector crunch to bite PCs

Research firm IDC reduces its PC sales forecast for 2003, saying government and education budget cuts could have an impact on worldwide sales.

Research firm IDC cut its PC sales outlook for 2003, citing the potential impact on worldwide sales of a larger-than-expected decline in public sector sales.

The Framingham, Mass., market researcher, which had at first predicted unit shipments would increase by 8.3 percent in 2003, issued an updated forecast on Friday that now shows worldwide PC unit sales increasing by a smaller 6.9 percent for the year.

While sales to the public sector, which includes government and educational bodies, were strong during 2002, IDC had forecasted they would slow during 2003. It now expects them to decrease more quickly than previously anticipated, pushed down by the severity of government budget crunches caused by falling tax revenue.

"In recent quarters, (public sector PC sales) have been more robust than expected, but now we're starting to see some more substantial cutbacks on public sector spending," said Loren Loverde, director of IDC's PC tracker service.

The worldwide market for PCs, which includes desktops, notebooks and servers that come with Intel and Advanced Micro Devices processors, is still expected to expand by nearly 10 million units to 145.6 million units in 2003. Unit shipments totaled 136.2 million in 2002, IDC said.

While 2003 will looks to be a bumpy year given public sector sales and the uncertainties created by the economy and the potential for war, IDC still believes the PC market will see improvement during the second half of 2003 and throughout 2004, as companies begin replacing their fleet of aging PCs.

"We expect 2004 will be stronger than 2003 economically, in terms of technology transitions and in overall demand" for PCs, Loverde said.

IDC predicts unit sales will increase by nearly 11 percent in 2004 from 2003 to about 161 million units.