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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.


Hopes for PC recovery fizzle

Fast, sleek machines fail to convince many consumers to upgrade

One phrase sums up the last 12 months for the PC industry: roller coaster.

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
The company launches its first iMac with a flat-panel display mounted on a chrome-colored swing arm.

January 7, 2002

Sony raises prices
Apple Computer and Sony were the first manufacturers to increase prices on computers sold in the United States, but others followed.

April 5, 2002

Sales down, but not by much
Worldwide unit sales, which normally decline by about 10 percent, fell only by 2.7 percent, breeding a sense of optimism about a market turnaround.

April 18, 2002

HP closes book on Compaq deal
After a protracted battle with its founding families, Hewlett-Packard wins the approval of its shareholders in its bid to buy Compaq Computer.

May 3, 2002

Notebook sales on the go again
A new study from IDC shows the percentage of notebook PCs shipped, versus shipments of desktops, rose again in the first quarter for the third consecutive year.

May 3, 2002

April showers on PCs
After a healthy first quarter, PC sales collapse. Retail sales in the United States hit the wall in April, which becomes the slowest month for sales in years.

June 4, 2002

Market stops declining, for now
The PC market is far from healthy--but for the moment, it has stopped shrinking. Worldwide PC shipments increase for the first time after five straight quarters of year-to-year declines, says IDC.

October 17, 2002

Newspaper ads spoil surprise
Microsoft and Hewlett-Packard planned to officially unveil the Media Center PC on a Tuesday, but Sunday newspaper inserts leaked the information.

October 28, 2002

Microsoft launches tablet PC drive
Hoping to write a new chapter in the saga of pen-based computing, the software giant officially unveils Windows XP Tablet PC Edition.

November 7, 2002

Upgrade cycle on hold
The three-year upgrade cycle for PCs is increasingly becoming a myth, according to market researcher Gartner.

November 15, 2002

Study: Things will look better
The PC market will experience tangible growth again in 2003 and 2004 due in part to the rise of wireless, according to market research firm IDC.

December 5, 2002

Intel ups revenue expectations
Chipmakers Intel and Advanced Micro Devices breathe a sigh of relief and raise revenue expectations after finding their fourth-quarter predictions were overly cautious.

December 5, 2002


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• AMD puts a number on job cuts
• Intel cuts 4,000 jobs
• Hopes on new chip to spur sales
• Intel plans next Pentium 4 for 2003
• Pentium 4 overhaul set for 2005
• "Hammer" to hold 100 million transistors
• IBM plans $2.5 billion charge, layoffs
• IBM talks up "computing on demand"
• New Gateway PCs: Pretty in platinum?
• DVD burning a hot ticket for laptops
• Gateway on thin ice for holidays