The Year Of Living Cautiously

The Canadian PC market is in decline and the outlook for 2003 isn’t pretty, according to IDC Canada.

IDC says overall sales are down by an estimated 7.8 per cent from one year ago as the market is expected to post a year-over-year decline of 4.3 per cent in 2002.

While third quarter figures

are up by 1.9 per cent over the previous quarter, IDC says the modest increase pales in comparison with the 7.3 per cent growth rate experienced in the third quarter of 2001.

For the fourth quarter 2002, total PC shipments are 801,700 units, representing a 3.8 per cent decline on a year-over-year basis, IDC says.

“”A particular weakness is evident in the desktop arena and specifically in the commercial desktop space,”” says Eddie Chan, research analyst for IDC Canada in Toronto. “”For Q3 2002, the commercial desktop space is down by 9.1 per cent.””

According to IDC, notebook shipments also slid by 7.1 per cent — a direct result of a sharp drop of 14.5 per cent of commercial shipments. Moreover, the standard Intel architecture server (SIAS) market is also down 5.8 per cent for the year. “”It’s going to be a tough year (2003),”” Chan says. “”Q3 was ugly, Q1 was strong, and Q2 was weaker than anticipated.

“”While the fourth quarter is typically consumer friendly because of the holidays, to translate that on the commercial front doesn’t mean much as enterprises are usually locked into service deals.””

In any event, Chan says companies are remaining tight-fisted with regards to their IT budgets.

“”There’s a hero mentality going on in enterprises right now: Don’t spend all of your IT budget and you’ll be seen as a hero for saving your company money,”” he says.

Vendors and their partners have strategies in place to deal with the decline, says Compugen Inc.’s Harry Zarek.

Zarek, the president and CEO of the Richmond Hill, Ont.-based PC systems integrator, says his customers have told him that cost control is currently within their product focus.

“”(Companies) are making new investments in IT only if there are immediate cost savings to be had or clear and immediate business impacts to be made. There are certainly exceptions, but in general I would say that today customers are looking for an ROI (return on investment) measured in weeks or months rather than quarters or years,”” he says. “”It is certainly true that the entire industry has recently seen some decline in sales of standard hardware. I believe we are doing better than most, but we have certainly seen some effect on the overall mix of our business.””

IDC’s figures also show Dell as the only hardware vendor to register positive year-over-year growth, posting a 16 per cent growth rate for the third quarter. With a leading 20.3 per cent share of the PC market, Chan says Dell asserted its No. 1 position along with two spots in desktops (20.1 per cent) and the hotly contested SIAS space (29.3 per cent).

Hewlett-Packard emerged in second place overall with an 18 per cent market share, IBM maintained third spot with 14.4 per cent market share, and Toshiba Canada came in fourth (6.3 per cent market share) with a performance based solely on notebook sales.

Lloyd Bryant, vice-president and general manager for HP Canada’s personal systems group in Mississauga, Ont., acknowledges the Canadian commercial desktop market has shrunk substantially. He says the modest growth that does exist, does so primarily in the U.S.

Regardless, Bryant says there’s been a change in focus for HP’s enterprise customers.

“”The decline in sales is consistent with what’s happening in the market place right now,”” he says. “”The customer’s focus is on ROI and extending the lifecycles of the products they purchase, thus lowering the TCO (total cost of ownership).

“”They’re all battling tight budgets right now.””

Bryant says companies should adopt a strategy similar to HP Canada’s two-prong plan to dealing with the market lull: reduce the customer’s TCO and innovate the PC for productivity.

“”Services help drive the cost out of the equation . . . many of our partners are seeing the same thing as we are,”” he says.

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Jim Love, Chief Content Officer, IT World Canada

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