29 November 2004 Analyst group Gartner is predicting a war of attrition is set to hit the PC market, with at least three of the top ten vendors leaving the market by 2007.
According to Gartner the level of competition in the PC market is intense, with increasing pressure on margins. Currently the manufacturers are being aided by a period of PC replacement, but this cycle is likely end within a year, leaving some vendors exposed.
“With PC replacements still in full swing, 2005 should be a reasonably strong year for PC vendors,” said Leslie Fiering, research vice president for Gartner’s Client Platforms group. “However, the end of the replacement cycle is likely to strain viability for even the largest PC vendors in 2006 and beyond.”
Currently, the top 10 PC vendors by unit shipment are: Dell, HP, IBM, Fujitsu, Fujitsu Siemens, Toshiba, NEC, Apple Computer, Lenovo Group and Gateway. Three of those will have abandoned the market by 2007, said Gartner.
Worldwide competition will add to the burden for the PC makers. Emerging markets are likely to account for 60% of market growth during 2006-08. But even PC heavyweight Dell has struggled to make significant impact in these markets, faced with stiff competition from very low cost local competitors.
Gartner says that in response global vendors may be forced to abandon any efforts to differentiate other than on price and service levels. “Exiting the market may be the only logical choice for global vendors bleeding profits and struggling for share,” Fiering added.
