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Thu 4 Mar 2010 12:00 AM

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In the doldrums: Year of gloom for pc sector

Data confirming how the EMEA PC market stood up to the economic downturn last year has just been released, but if you belong to one of the leading PC and notebook producers it might just make for uncomfortable viewing.

In the doldrums: Year of gloom for pc sector
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In the doldrums: Year of gloom for pc sector
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Data confirming how the EMEA PC market stood up to the economic downturn last year has just been released, but if you belong to one of the leading PC and notebook producers it might just make for uncomfortable viewing.

By the end of last year, an EMEA PC market that was worth more than 102 million units just 12 months before had shrunk by 5% to around 96.5 million units as the onslaught of the global economic downturn took its toll on computer sales.

The scale of the drop might not seem substantial in the grand scheme of things, but for an industry that has consistently risen to the challenge of exceeding the previous year's performance, it still remains a painful blow to take.

Some vendors felt the pain more than others, with those exposed to the commercial sector finding the going particularly tough. Preliminary data just made public by IDC reveals that out of the top five PC vendors in EMEA, Dell recorded the biggest slump in unit sales as volumes plummeted 15% - three times that of the overall rate of the market - to 9.2 million units.

A 2% rise in sales during the fourth quarter indicates the US-based vendor might be returning to better form, although the results did little to put a shine on the full-year numbers.

Back in 2008, Dell trailed second-place Acer by less than six percentage points - 10.7% to 16.4% to be precise - but that gap was widened massively last year and will take a real turnaround in fortunes to close. Dell's market share for 2009 stood at 9.6%. Acer's, in contrast, was twice as much.

To understand why you only have to look at how the Taiwanese mobile PC vendor managed to attain growth in a declining market. Aggressive promotions in the low-end and SMB segments saw its sales rocket by 16%, sending out a message that its ambition of reaching the number one spot may not be as far-fetched as it sounds.Indeed, Acer is unlikely to be as concerned about putting daylight between itself and Dell as it is with narrowing the gap on fierce rival HP, the market's long-term leader. What was a four point deficit between the pair in 2008 has now been reduced to less than one percentage point. The fact that HP didn't actually perform that badly - volumes only fell 3% in 2009 - is a further endorsement of Acer's tactics to win market share.

If anything, it seems like Acer's strategy is more suited to a depressed market than one where growth is more forthcoming. The question, then, will be whether it can keep up the same pace when conditions generally improve for its main competitors.

Karine Paoli, associate vice president at IDC, forecasts a more even playing field for all PC manufacturers in 2010. She expects the sector to benefit from a rebound in business renewal cycles, while Windows 7 and cheaper ultra portable models should stimulate purchases in the consumer space.

"Market conditions will remain tough as competition will maintain pricing pressure, but market expansion in both mature and emerging countries will offer vendors continued growth opportunities," she added.

With growth returning to much stronger levels in Q4, including a 17% spike in the Middle East and Africa, it looks distinctly like the market is starting to recover, if only modestly. Market contenders, such as Asus and Toshiba, which saw EMEA sales fall 4% and 7% respectively last year, will feel just as optimistic as big-hitting rivals such as HP.

"Mini notebooks will remain hot in 2010, but growth is likely to display slightly lower double-digit rates as the renewal of mainstream notebooks gains pace," said Eszter Morvay, research manager at IDC. "In addition, there will be new contenders like thin and light portables, smartbooks and tablet-based devices to steal the limelight from mini-notebooks and stir up the competition in the coming quarters."

Whatever the outcome, it seems the next 12 months will turn out to be completely different to those that have just gone before us. The majority of PC brands will be hoping so anyway.

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