Year in review: PC hopes fizzle
PC manufacturers and chip suppliers started the year with vigor, but fast, sleek machines failed to convince many consumers to upgrade.
Fast, sleek machines fail to convince many consumers to upgrade
PC manufacturers and chip suppliers Intel and Advanced Micro Devices started the year with vigor, finding unexpectedly high demand for PCs in the first quarter. But the glow of improving sales wore off quickly, when sales slowed in the following quarter. Consumer sales started dropping in April, and highly anticipated increases in business sales never materialized, doubling the difficult task that lay ahead for PC makers in the rest of the year.
In PCs, processor speeds continued to climb quickly, moving from a top desktop chip speed of 2GHz at the beginning of the year to 3.06GHz by November.
But PC sales limped along through the third quarter. Companies have been keeping PCs in use longer and concentrating their limited information technology funding on infrastructure such as storage and servers. Many consumers have also opted to buy other electronic devices instead of replacing PCs.
With the exception of a few new small form-factor or specialized high-end gaming machines, PC manufacturers showed little creativity with Windows-based PCs in 2002 and instead concentrated on price competition. Outside of efforts by Apple Computer, which introduced the stylish flat-panel iMac last January, the design of most PCs is still boxy and pretty boring, even if some now come in black.
One bright spot has been notebook PCs, which saw consumer sales accelerate during the year. But an overall lack of innovative products may have helped stall PC sales in 2002. Efforts by Microsoft, which tried to spur innovation with its Tablet PC and Media Center PC--hardware/software efforts that specialize in mobile productivity and multimedia--have so far had minimal impact, though Hewlett-Packard reported good sales of its Media Center machine.
Meanwhile, stiffer competition for fewer buyers forced a number of PC manufacturers to reorganize, cut costs and cut jobs.
HP, for its part, continues to work through its integration effort to absorb Compaq Computer, which it acquired in May. IBM, as part of a reorganization plan, cut as many as 15,000 jobs.
Intel and AMD also cut jobs. Intel, which reduced capital expenditures and shed several business units, plans to eliminate 4,000 jobs in total. AMD came down from a high that saw it ship a record number of processors early in the year. Ultimately, excess inventory and slowing sales forced it to implement cost-cutting measures that will trim 2,000 jobs.
Only Dell Computer, which continues to gain market share against competitors like HP, looks likely to emerge relatively unscathed from 2002.
One phrase sums up the last 12 months for the PC industry: roller coaster.
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Hopes for PC recovery fizzle Fast, sleek machines fail to convince many consumers to upgrade
PC manufacturers and chip suppliers Intel and Advanced Micro Devices started the year with vigor, finding unexpectedly high demand for PCs in the first quarter. But the glow of improving sales wore off quickly, when sales slowed in the following quarter. Consumer sales started dropping in April, and highly anticipated increases in business sales never materialized, doubling the difficult task that lay ahead for PC makers in the rest of the year. In PCs, processor speeds continued to climb quickly, moving from a top desktop chip speed of 2GHz at the beginning of the year to 3.06GHz by November. But PC sales limped along through the third quarter. Companies have been keeping PCs in use longer and concentrating their limited information technology funding on infrastructure such as storage and servers. Many consumers have also opted to buy other electronic devices instead of replacing PCs. With the exception of a few new small form-factor or specialized high-end gaming machines, PC manufacturers showed little creativity with Windows-based PCs in 2002 and instead concentrated on price competition. Outside of efforts by Apple Computer, which introduced the stylish flat-panel iMac last January, the design of most PCs is still boxy and pretty boring, even if some now come in black. One bright spot has been notebook PCs, which saw consumer sales accelerate during the year. But an overall lack of innovative products may have helped stall PC sales in 2002. Efforts by Microsoft, which tried to spur innovation with its Tablet PC and Media Center PC--hardware/software efforts that specialize in mobile productivity and multimedia--have so far had minimal impact, though Hewlett-Packard reported good sales of its Media Center machine. Meanwhile, stiffer competition for fewer buyers forced a number of PC manufacturers to reorganize, cut costs and cut jobs. HP, for its part, continues to work through its integration effort to absorb Compaq Computer, which it acquired in May. IBM, as part of a reorganization plan, cut as many as 15,000 jobs. Intel and AMD also cut jobs. Intel, which reduced capital expenditures and shed several business units, plans to eliminate 4,000 jobs in total. AMD came down from a high that saw it ship a record number of processors early in the year. Ultimately, excess inventory and slowing sales forced it to implement cost-cutting measures that will trim 2,000 jobs. Only Dell Computer, which continues to gain market share against competitors like HP, looks likely to emerge relatively unscathed from 2002. --John Spooner |  |  Apple introduces flat-panel iMac January 7, 2002 Sony raises prices April 5, 2002 Sales down, but not by much April 18, 2002 HP closes book on Compaq deal May 3, 2002 Notebook sales on the go again May 3, 2002 April showers on PCs June 4, 2002 Market stops declining, for now October 17, 2002 Newspaper ads spoil surprise October 28, 2002 Microsoft launches tablet PC drive November 7, 2002 Upgrade cycle on hold November 15, 2002 Study: Things will look better December 5, 2002 Intel ups revenue expectations December 5, 2002
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