ITBusiness.ca

Are the PC doomsayers wrong?

After a dismal second quarter, Canadian PC unit shipments increased in the fourth quarter of 2002. Canadian commercial and consumer users received shipments of 973,700 PCs in the fourth quarter of 2002. The Canadian white box market saw quarter over quarter increases in unit shipments from Q2 and this

continued into Q4, albeit in a less than stellar fashion.

Made in Canada PC shipments increased by two per cent from Q3 to Q4, culminating in a total of 410,200 units in the final quarter of 2002. We have seen MDG dominating the press, the Shopping Channel and our own market research as they celebrate 12 years of business. Canadian business is steady but it is not without its challenges.

The lackluster commercial demand for PCs in general is not expected to improve significantly until the war in Iraq ends completely. The uncertain geopolitical climate has given us daily fluctuations in the stock market. Business and consumers feel this nervousness alike.

The other challenge for vendors in this market, and which is also applicable to the PC market at large, is the fact that the Canadian market is reaching maturation.

Over two-thirds of Canadian households already have a PC. One major Canadian assembler Evans Research Corp. contacted believes that up to 90 per cent of his business is from second time buyers. It is often very difficult to sway a prospective buyer to switch brands unless that user has had an extremely negative experience elsewhere.

Another white box assembler stated that he thought that the three to five year buying cycle everyone talks about is now closer to six or eight years. Not all distributors are in agreement. Some say component manufacturers are producing product extremely quickly and forcing users to upgrade because they are no longer supporting previous versions.

There is an expectation that the replacement systems from all the PCs purchased in 1999 will trickle in over the next few years. Evans Research believes we have already witnessed the beginning of this. It was not uncommon for our industry contacts to express optimism for the coming year.

Also in line with this positive perspective are Intel’s claims that 50 per cent of their installed base is older than three years. This has climbed from 33 per cent one year ago.

Are the “doomsayers” wrong? Could 2003 be a significant year for PC vendors? Evans Research believes the current year could well be indicative of the next few years to come, albeit with a minor spike upwards in Q3 of 2003 due to an influx of Ontario mobile users (a.k.a. the double cohort) heading to post-secondary institutions.

On the downside, however, there is no new “must have” application to accelerate the demand for higher performance PCs. Although e-mail is viewed as a “must have” application, it does not drive new purchases. Someone who requires basic word processing and e-mail, for instance, can have their needs satisfied with their four or five year-old system.

Intel also claims that 250 million PCs still run Windows 95/8 and use lower than a 500 MHz system. Microsoft no longer supports Windows 95 and they have stated that they will no longer support Windows 98 in 2004. Will this really drive new sales?

General market and economic conditions are sluggish. Businesses are being very cautious playing a “wait and see” game as they watch the U.S. deal with their international woes. The consumer arena, in a less mature developmental stage, could well be where we will see marketing efforts directed.

Michelle Warren is a market analyst for Evans Research Corp. of Toronto.

Exit mobile version