Unabated Notebook Adoption Will Continue to Drive Growth in Western European PC Market

According to IDC's latest PC market forecast, Western European PC shipments will expand by a solid 7.9% average annual growth rate over the next 5 years. While growth of desktops is set to remain modest as the market has become predominantly a renewal market, the boom in demand for notebook computers from businesses and consumers will drive continued European market expansion. "Stimulated by declining price points, increasing product attractiveness and performance, demand for portable PCs will continue unabated and notebook sales will increase by an average annual growth rate of 15% over the next 5 years," said Eszter Morvay, research analyst at IDC's EMEA Quarterly PC Research group. "Directly impacted by the transition to portable form factors as well as increased market saturation, desktop shipments will record a mere 1.2% growth over the forecast period." 2005 marked an important transition across the region with increased commoditization of laptops forcing PC makers to develop increasingly effective business models. The proliferation of low-priced entry-level systems and declining prices remained a major volume generator especially in the consumer space, boosting penetration rates across Western Europe. As a result, portable PC sales expanded by a robust 31.1%, while desktop sales also recorded a healthy 7.5% growth. Overall, Western European PC shipments reached 47 million units in 2005, representing a solid 16.3% increase year on year, while total revenue amounted to € 42 billion, increasing by 4.1% compared to a year ago. Overall market growth in 2006-2007 is set to decelerate to below 9% due to slowing desktop trends. However, notebook momentum will continue fueling market demand and growth opportunities, while vendor competition is not expected to soften. Notebook sales will remain buoyant with average annual growth reaching close to 18% in 2006-2007. However, continued price erosion will result in much softer trends in revenue terms. Private purchases will remain the key driver of growth with attractive prices stimulating first-time buyers as well as a growing renewal market. Commercial notebook sales will also display solid trends as portable adoption continues unabated in SMBs along with growing demand in the corporate sector. Increasing integrated wireless solutions will further boost portable adoption across all segments. Desktop sales will continue to decelerate in the coming years, recording an average annual growth rate of less than 2% in 2006-2007. Demand will remain constrained in 2006 by a lack of large-scale corporate rollouts and an ongoing transition to mobility in the SMB space. Traction around new Media Center and digital home solutions will continue, but the delayed launch of Vista may lead to "wait and see" attitudes and affect consumer demand levels in 2006. However, in 2007, the market will start to benefit from the next corporate refresh wave as well as the migration trends to Vista. Beyond 2008, the market will become increasingly dependent on replacement demand. However the evaluation of new client form factors across both the business and consumer segments will continue to represent major opportunities. A fierce competitive environment and declining profit margins will nevertheless remain key challenges for industry players. IDC's new Western European PC forecast report, Personal Computing in Western Europe, Forecast and Analysis, 2006-2010 (Doc #JP02N), contains a comprehensive analysis of form factor trends and forecast assumptions for the next 5 years for each 16 Western European country, as well as a detailed review of the PC market and competitive analysis for 2005.