eTForecasts - Worldwide PC Forecast

WORLDWIDE PC MARKET
A market research report with perspectives and a top-down view
of the PC industry - past, present and future trends

Table of Contents
List of tables and Figures
1.0 Executive Summary
1.1 PC Market Segments
1.2 PC Vendor Shipments
1.3 New PC Opportunities

Table of Contents

1.0	Executive Summary	6
1.1	PC Market Segments	7
1.2	PC Vendor Shipments	8
1.3	New PC Opportunities	9
2.0	PC Forecast Summary	12
2.1	What is Included in the PC Shipment Forecast?	12
2.2	PC Market Perspectives	13
2.3	Worldwide PC Sales Summary	14
2.4	USA PC Sales Summary	16
2.5	PC Versus PDA Sales	18
2.6	Historical Perspectives on USA PC Industry	19
3.0	PC Technology Trends	24
3.1	Technology Trends	24
3.2	Semiconductor Technologies	27
3.3	PC Technology Trends	28
3.4	Mass Storage Technologies	33
3.4.1	Memory Cards	35
3.5	Emerging PC Opportunities	36
4.0	Worldwide PC Unit Forecast	38
4.1	Total PC Unit Sales by Region	38
4.2	Server PC Unit Sales by Region	40
4.3	Desktop PC Unit Sales by Region	41
4.4	Mobile PC Unit Sales by Region	42
4.4.1	Tablet PC Forecast	44
4.5	PCs-in-Use by Region	45
4.6	PCs in Homes by Region	48
4.7	PCs in Businesses by Region	51
5.0	Worldwide PC Revenues	53
5.1	Total PC Revenues by Region	53
5.2	Server PC Revenues by Region	54
5.3	Desktop PC Revenues by Regions	55
5.4	Mobile PC Revenues by Region	57
6.0	Worldwide Shipments of Leading PC Vendors	59
6.1	U.S. Shipments of Leading PC Vendors	60
7.0	Forecast Methodology and Assumptions	63
7.1	PC Demand Factors	64
7.2	Ultimate PC Penetration Rates	66
7.3	PC Forecast Assumptions	69
8.0	Forecast Spreadsheet Details	71
8.1	PC Market Summary by Region	72
8.1.1	USA PC Market Summary	72
8.1.2	N. America PC Market Summary	74
8.1.3	W. Europe PC Market Summary	77
8.1.4	E. Europe PC Market Summary	79
8.1.5	Europe PC Market Summary	81
8.1.6	Asia Pacific PC Market Summary	84
8.1.7	Latin America PC Market Summary	86
8.1.8	M. East/Africa PC Market Summary	89
8.1.9	Worldwide PC Market Summary	91
8.2	PC Manufacturer Summary	94
8.2.1	Apple Computer	94
8.2.2	Compaq Computer	95
8.2.3	Dell Computer	97
8.2.4	Gateway	99
8.2.5	Hewlett-Packard	100
8.2.6	IBM	101
8.2.7	NEC and Packard-Bell	103
8.2.8	Toshiba	104
9.0	PC Industry Resources	106
9.1	PC-Related Newsletters	106
9.2	PC-Related Magazines	107
9.3	PC-Related Websites	108
9.4	PC-Related Organizations	109
9.5	Author Bio	113
9.6	Other Research Reports by eTForecasts	113

List of Tables and Figures

Table 1.1	U.S. and Worldwide PC Market Growth	6
Figure 1.1	PC Sales by Regions	6
Table 1.2	U.S. and Worldwide PC Market Segments	7
Figure 1.2	PCs In-Use by Regions	7
Table 1.3	U.S. and Worldwide PCs-in-Use and PC Sales Per 1,000 People	8
Table 1.4	PC Sales of Leading Vendors	9
Table 1.5	New PC Opportunities	10
Table 2.1	What is Included in the PC Sales Forecast?	12
Table 2.2	PC Market Perspectives	14
Table 2.3	Worldwide PC Market	14
Figure 2.1	Worldwide PC Sales by Product Segments	15
Table 2.4	Worldwide PC Market Segments	16
Table 2.5	USA PC Market	16
Figure 2.2	USA PC Product Unit Sales	18
Table 2.6	USA PC Market Segments	18
Table 2.7	U.S. and Worldwide PC Market Growth	19
Table 2.8	USA Historical PC Sales	19
Table 2.9	USA PC Generations: 1-3	20
Table 2.10	USA PC Generations: 4-6	21
Table 2.11	USA PC Generations: 7-10	22
Figure 3.1	Technologies for PCs	24
Figure 3.2	Technology Price-Performance Wedge	25
Table 3.1	Technology Wedge Impact	26
Figure 3.3	Technology Wedge Families	26
Table 3.2	Semiconductor Technology Trends	27
Table 3.3	PC Technology Trends	29
Table 3.4	Storage Technology Trends	34
Table 3.5	Small Form Factor Memory Cards	35
Table 3.6	Emerging PC Opportunities	36
Table 4.1	PC Unit Sales by Region	38
Table 4.2	Regional Market Shares for PC Unit Sale	39
Table 4.3	Regional PC Unit Sales Per 1,000 People	39
Table 4.4	Server PC Unit Sales by Region	40
Table 4.5	Regional Market Shares for Server PC Unit Sale	41
Table 4.6	Desktop PC Unit Sales by Region	41
Table 4.7	Regional Desktop PC Unit Sale Market Shares	42
Table 4.8	Mobile PC Unit Sales by Region	43
Table 4.9	Regional Mobile PC Unit Sale Market Shares	43
Table 4.10	tablet PC Unit Sales by Region	44
Table 4.11	Regional tablet PC Unit Sale Market Shares	45
Table 4.12	PCs-in-Use Per 1,000 People by Region	45
Table 4.13	PCs-in-Use by Region	46
Table 4.14	Server PCs-in-Use by Region	46
Table 4.15	Desktop PCs-in-Use by Region	47
Table 4.16	Mobile PCs-in-Use by Region	48
Table 4.17	Households With PCs by Region	48
Table 4.18	PCs-in-Use Per Household by Region	49
Table 4.19	PCs in Homes by Region	50
Table 4.20	Share of PCs in Homes of Total PCs by Region	50
Table 4.21	PCs in Businesses by Region	51
Table 4.22	Share of PCs in Businesses of Total PCs by Region	52
Table 5.1	Worldwide PC Revenues by Region	53
Table 5.2	Regional PC Revenue Market Shares	54
Table 5.3	Server PC Revenue by Region	54
Table 5.4	Regional Server Revenue Market Shares	55
Table 5.5	Desktop PC Revenue by Region	56
Table 5.6	Regional Desktop PC Revenue Market Shares	56
Table 5.7	Mobile PC Revenue by Region	57
Table 5.8	Regional Mobile PC Revenue Market Shares	58
Table 6.1	Leading PC Vendors' Worldwide Shipments: 1990-1999	59
Table 6.2	Leading PC Vendors' Worldwide Shipments: 2000-2008	59
Table 6.3	Leading PC Vendors' Worldwide Unit Market Shares	60
Table 6.4	Leading PC Vendors' USA Shipments: 1990-1999	60
Table 6.5	Leading PC Vendors' USA Shipments: 2000-2008	61
Table 6.6	Leading PC Vendors' USA Unit Market Shares	61
Table 7.1	PC Demand Factors	65
Table 7.2	USA Ultimate PC Penetration in 2010	66
Table 7.3	2010 USA PC Replacement Sales Scenario	67
Table 7.4	Ultimate PC Penetration Factors	68
Table 7.5	PC Forecast Assumptions	69
Table 7.6	PC Product Trend Assumptions	70
Table 8.1	PC Shipment Forecast Content	71
Table 8.2	PC Vendor Forecast Content	71
Table 8.3	USA PC Market Summary	72
Table 8.4	N. America PC Market Summary	74
Table 8.5	W. Europe PC Market Summary	77
Table 8.6	E. Europe PC Market Summary	79
Table 8.7	Europe PC Market Summary	82
Table 8.8	Asia Pacific PC Market Summary	84
Table 8.9	Latin American PC Market Summary	87
Table 8.10	M. East/Africa PC Market Summary	89
Table 8.11	Worldwide PC Market Summary	92
Table 8.12	Apple Computer	94
Table 8.13	Compaq Computer-Historical Data	95
Table 8.14	Dell Computer	97
Table 8.15	Gateway	99
Table 8.16	Hewlett Packard	100
Table 8.17	IBM	102
Table 8.18	NEC & Packard-Bell	103
Table 8.19	Toshiba	104
Table 9.1	PC-Related Newsletters	106
Table 9.2	PC-Related Magazines	107
Table 9.3	PC-Related Websites	108
Table 9.4	PC-Related Organizations	109

1.0 Executive Summary

The PC industry celebrated its 25th year anniversary in 2000. From its humble beginning as hobby computer kits in the spring of 1975, the PC industry has come a long way. In 1975 less than 50,000 PCs were sold with a value of about $60M. From this limited start the PC industry has grown to unit sales exceeding 128M units per year and revenues surpassing $225B in 2002. The next table shows the tremendous growth of the PC industry in the last 25 years. And the growth of the PC industry will continue, but at much lower rates than previously.

The sheer size of the PC industry limits its growth rate, but the yearly worldwide sales will grow by over 80% in the next six years—from 134M in 2002 to nearly 249M in 2008 or a 10.9% compound annual growth rate. The number of PCs in-use surpassed 500M units in 2000 and will reach 1.17B units by year-end 2008. Cumulative PC sales topped 1B units in 2002 and will top 2B in 2008. PCs in-use reached nearly 206M in the U.S. in 2002 and will surpass 269M in 2008.

Table 1.1 U.S. and Worldwide PC Market Growth
	1975	1980	1985	1990	1995	2000	2003	2005	2010
U.S. PC Sales (#M)	0.04	0.76	6.6	9.5	21.4	46.0	48.3	56.6	66.7
U.S. PC Revenues ($B)	0.05	1.5	17.2	24.5	56.8	86.9	78.1	84.5	86.1
U.S. PC Installed Base (#M)	0.04	1.4	19	51	86	177	218	236	290
Worldwide PC Sales (#M)	0.05	1.1	11	24.2	70.1	130	149	181	249
Worldwide PC Revenues ($B)	0.06	3.6	29.5	71.3	155	247	243	270	302
Worldwide Installed Base (#M)	0.05	2.1	33	100	225	523	738	896	1,350

Yearly PC sales for the U.S. and the main regions of the world are summarized in the next figure. North America will remain the largest region until 2008. All figures are in millions of units.

Figure 1.1: PC Sales by Regions

PC revenues are growing slower than unit growth due to considerable price declines. The worldwide PC revenues were $247B in 2000, which declined to $229B in 2002. Worldwide PC revenue will surpass $300B in 2008 for a compound annual growth rate of 4.7%.

1.1 PC Market Segments

This PC forecast consists of three product segments—PC servers, desktop PCs and mobile or battery-powered PCs. Mobile PCs are dominated by notebook PCs. Sales of the three PC segments are shown in the next table.

Table 1.2 U.S. and Worldwide PC Market Segments
Unit Sales	1990	1995	2000	2003	2005	2010
U.S. PC Server Sales (#M)	0.04	0.51	2.5	2.7	3.3	4.4
U.S. Desktop PC Sales (#M)	8.4	16.8	33.1	31.3	33.6	34.2
U.S. Mobile PC Sales (#M)	1.1	4.1	10.4	14.2	20.4	30.1
Worldwide PC Server Sales (#M)	0.06	0.94	5.5	7.1	9.7	15.2
Worldwide Desktop PC Sales (#M)	21.7	47.1	96.2	102.1	120.1	147.7
Worldwide Mobile PC Sales (#M)	2.4	10.0	27.9	40.1	60.0	104.0

The desktop PC segment will remain the largest PC segment, but both PC servers and mobile PCs are taking market share from the desktop PC segment. Mobile PCs include all laptop, notebook and other mobile PCs. The emerging tablet PCs and wearable PCs are also include in the mobile PC segment. PDAs and similar products such are palm computers are excluded.

PCs in-use for the main regions of the world is shown in the next figure. Asia Pacific is becoming the largest region for PCs-in-use in 2005. All figures are in millions of units.

Figure 1.2: PCs In-Use by Regions

PC sales per capita and PCs-in-use per capita indicates the maturity and PC penetration rate of a given market. The higher the PC penetration rate is, the lower the growth is. The next table shows the PC sales per 1,000 people and PCs-in-use per 1,000 people in the U.S. and worldwide.

Table 1.3 U.S. and Worldwide PCs-in-Use and PC Sales Per 1,000 People

1990 1995 2000 2003 2005 2010

U.S. PC Sales Per 1,000 People 38.2 81.0 163.5 165.0 193.4 222.0

U.S. PCs-in-Use Per 1,000 People 192.2 324.1 629.5 744.0 779.3 933.8

Worldwide PC Sales Per 1,000 People 4.6 10.2 21.4 23.7 29.4 39.2

Worldwide PCs-in-Use Per 1,000 People 18.7 39.8 86.1 117.0 139.1 196.9

The table clearly shows that the U.S. penetration is rising rapidly and signals that PC growth rates are likely to decline. Western Europe also has relatively high PC penetration rates. The rest of the world is further behind in PC sales and PC usage per capita and therefore has room for continued high growth.

From its hobby computer roots in 1975, the PC grew to become a useful productivity tool by 1980 for office applications. In the early to mid-1980s the foundation was established to make the PC ubiquitous by the 1990s. De facto hardware and software standards were established and the key PC application segments emerged.

By the mid-1980s the PC became the driving force for the whole computer industry, and it retained this crown for over 10 years. PC industry dynamics changed by the late-1990s when PCs became the means to get to the Internet. In the last five years the Internet has become more important than the PC industry. Today the Internet is the main driving force for the PC and the whole computer industry. But it is important to understand that the foundation of the Internet is mainly based on the PC industry and a vast land-based packet communication network. In the next decade a cellular-based packet communications network and broadband will further grow the Internet.

Over the next 10 years the PC industry will prosper and thrive with two additional driving forces—consumer electronics devices built with computing platforms (information appliances) and mobile devices such as PDAs and Smartphones. The PC industry is very competitive and has a good record of adapting to emerging technologies and market trends. This is likely to happen again and the PC industry will embrace information appliances and mobile devices.

The computer and business press have called the emergence of information appliances the "Post-PC Era". The implications of this term are that the information appliances will replace a large portion of PCs and will soon overtake PCs as the most important high-tech product category. This is unlikely to happen in the next decade despite information appliance proliferation in homes and business worldwide. Instead nearly the opposite is taking place. Computer hardware and software platforms are invading the fixed function electronic devices in the telecommunication, consumer electronics, auto electronics and related industries. The long-term trend is clear: most electronic devices will sooner or later be based on microprocessors, software, networking and other computer hardware technologies. This will happen because the cost decline, capability growth and flexibility of computer platform-based designs eventually become the best solution. The key question is not if this will happen, but when will it happen in the various product segments.

1.2 PC Vendor Shipments

Dell and HP are currently the leading PC manufacturers and they will remain the top 2 vendors for at least the next five years. The next table shows the historical PC sales and future projections of these two companies. Note that the PC sales of Compaq and HP are combined for all the years including the pre-merger years shown in the table (1990, 1995 and 2000).

Table 1.4 PC Sales of Leading Vendors
	1990	1995	2000	2003	2005	2010
Dell Computer: USA (#K)	143	1,145	9,690	15,455	21,690	33,800
Dell Market Share: USA (%)	1.50	5.36	21.06	32.02	37.86	49.19
HP & Compaq: USA (#K)	480	3,870	13,295	10,500	12,420	17,100
HP/Compaq Market Share USA: (%)	5.05	18.11	28.90	21.75	21.68	24.88
Dell Computer: WW (#K)	205	1,930	15,050	25,210	36,900	64,670
Dell Market Share WW: (%)	0.85	3.33	11.61	16.68	19.45	24.23
HP & Compaq: WW (#K)	1,035	8,200	27,985	24,415	30,060	40,800
HP/Compaq Market Share WW: (%)	4.29	14.14	21.59	16.35	15.84	15.29

Compaq, Dell or HP/Compaq have been the PC sales leader since 1994 in the USA and worldwide. Dell became the worldwide PC sales leader in 2001, but was surpassed in 2002 by HP because of its merger with Compaq. For 2003 Dell is projected to retake the lead and is forecasted to retain and strengthen this lead through the forecast period.

Dell has a much wider lead in the USA than worldwide. This is because Dell’s business model is fully developed in the USA, but remains in the start-up phase or in the early to mid-level development phase outside the USA. As Dell’s business model grows and takes hold outside the USA, Dell’s market share will strengthen considerably. Dell may not establish as high a market share outside the USA, but the share will undoubtedly grow strongly. The result is that Dell is like to widen its lead over HP in the next five years.

The report and spreadsheet also have PC sales estimates for five other PC companies: Apple, Gateway, IBM, NEC/Packard-Bell and Toshiba.

1.3 New PC Opportunities

The PC industry is seeing several new opportunities. The next table summarizes the many new opportunities created by information appliances for the PC industry. There are four new opportunities that are line-extensions of the existing PC market. There are also several opportunities that expand PC usage as the infrastructure for the emerging information appliances that are using computer hardware and software platforms as their basic architecture.

Multi-PC households use home PC servers to simplify and lower Internet access cost and to coordinate other PC activities. A home server may not always increase the number of PCs in a household because the function is served by one of the existing PCs. However, the home server PC is usually a more capable PC and increases the average PC price. The home PC server is already established and will continue to grow in the next decade.

The Media PC is focused on handling multi-media functions such as TV, video, music and photos. Thus the Media PC will be competing with the traditional consumer electronics products. The Asian and European consumer electronics companies have formed a consortium to promote Linux as the standard for media PCs. Windows XP Media PCs have been available since 3Q’2002 and has a lead over Linux devices, which may not emerged until 2005 or later. The Media PC is an emerging opportunity that has significant future potential.

The tablet PC is another emerging PC opportunity. The tablet PC is likely to expand the overall PC market because a portion of the mobile work force that previously could not use PCs now have a product that can enhance their productivity and capabilities. The tablet PC may also increase the number of multi-PC workers. This report has a forecast for the tablet PC market. Long-term it is likely that the tablet PC may not remain a separate PC product segment. Instead tablet PC functionality will become a feature of nearly all notebook PCs.

Technology advances allow PC functionally to be put in smaller packages, which means handheld PCs will eventually become a viable product segment. There are a few handheld PCs available from companies such as Antelope Technologies, OQO and others are developing Windows-based handheld PCs. Handheld PCs will overlap will high-end PDAs. Handheld PCs will be attractive to a portion of PDA users due to availability of the PC software base. The market size of the handheld PC segment is unclear, but could be significant in 10 years.

Table 1.4 New PC Opportunities
Opportunity	PC Products	Comments
Home network servers	All types of PCs, from desktop PCs to low-end servers	Synchronization and information sharing between multiple devices
Media PCs	PC & server for photo, music and TV/video applications	Will expand consumer PC market due to multiple PCs per households
Tablet PCs	Portable PCs with handwriting input	Expands notebook PC market
Handheld PCs	PCs in handheld form factor Similar to PDAs & smartphones	First products are emerging, but will be important in 3-5 years.
Information appliance building blocks	Microprocessors, peripherals and software components	Many PC companies will benefit from this trend
Information appliances	PC appliances will gain a significant share of information appliance market	Microprocessors, peripherals and software components
Service infrastructure for information appliances	PC servers—low-end to high-end products will gain most of this market	10 year potential is 1B+ devices that will need information from servers
Service infrastructure for web cellular IAs	PC servers—low-end to high-end products will gain most of this market	10 year potential is 1B+ devices that will need information from servers
Web caching networks	PC servers—mostly high-end products will gain most of this market	Web caching networks are used to improve web access performance
Content development systems	All types of PCs, but mostly high-end desktop PCs	Web content for IAs wireless devices will be developed on PCs

Information appliances are new opportunities for the PC industry, because they will use PC hardware and software. PC microprocessors—usually low-end versions or earlier generations—will be used in a significant portion of information appliances. PC peripherals such as disk drives, printers, pointing devices and others will see widespread use with information appliances. PC hardware technologies such as flat displays, keyboards, touch panels and memory cards will be used in every information appliance. Information appliances will also use PC software and software based on current PC software.

The growth of information appliances is also an opportunity for low-end PCs. A significant portion of information appliances will be PC appliances, which are PCs programmed to do information appliance functions. Such PC appliances will primarily be used as high-end information appliances and may increase in importance as technology advances increase IA capabilities and functionality.

The infrastructure that will be used to connect and deliver services to the information appliances is another opportunity for PCs—especially PC servers. Most of the information appliance service content will be stored in databases that will run on PC servers. The service content will be distributed to additional caching servers as part of the Internet infrastructure. Caching servers are used for performance response time enhancement. The number of PC servers needed to feed the information appliances will be proportional to the installed base of information appliances and will be in the millions of units by 2008.

Another big PC opportunity is the need that will develop in homes that have multiple information appliances. A large portion of these homes will need a server that coordinates data transfers, data storage and other functions between the information appliances. These home PC servers are already emerging for multi-PC households and will get a further boost from multi-IA households. The worldwide number of home PC servers will be in the tens of millions by 2010.

The software and content for information appliances will not be developed on information appliances, but on high-end PCs. Software development systems for information appliances may be another million unit opportunity for PCs by 2010.

In summary, the emerging information appliance segment will have little impact on the PC industry in the next five years. Information appliances may take some sales away from PCs, but they will also generate new opportunities for the PC industry. Millions of PC servers will be needed to support the hundreds of millions of information and web appliances that will be used in homes, offices and mobile locations. PC appliances, which are information appliances based on PCs, will provide another opportunity for the PC industry. The introduction of PC appliances embraces the information appliance market by creating easier-to-use application-specific PC-based products.

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