PC Sales Up, But Revenue Lagging, Study Shows

Worldwide PC shipments are continuing to grow, but revenue is not keeping pace, a new study reports.

Worldwide revenue from PC sales will only grow 0.5 per cent in 2005, despite projections of a 12.7 per cent gain in shipments, analyst company Gartner reports. Worldwide PC unit shipments are projected to total 206.6 million in 2005, with PC revenue totaling US$202.7 billion. In 2006, worldwide PC units are expected to grow 8.7 percent, but PC revenue will decline 0.4 percent.

Gartner analysts said the disparity in growth rates is attributable to continuing declines in the average selling price of PCs.

Price cuts appear to be fueling that growth, said George Shiffler, principal analyst with Gartner.

"Mounting cost pressures will eventually slow on-going ASP declines, especially if PC component prices firm," Mr. Shiffler said. "However, as recent earnings announcements illustrate, vendors are facing strong competitive pressures. These pressures are only likely to intensify if unit growth slows. Vendors may have little choice other than to cut prices or offer more lower-cost, de-featured machines."

PC growth will continue to be buoyed by strong mobile PC shipments as buyers are increasingly attracted to mobile computing because of lower prices and enhanced wireless experiences. Worldwide mobile PC units are forecast to grow 31 percent in 2005.

The results are further confirmation of growing sales for companies like Apple Computer, HP and Dell. But some recent revenue estimates for the third and fourth quarters are showing things will likely soften. In its third quarter, Dell reported revenue didnit keep pace with previous estimates, but shipments grew 17%.