Sustained Notebook Market Buoyancy and Expansion in CEMA Will Drive 14.4% EMEA PC Market Growth in 2008, Says IDC

The EMEA PC market recorded an outstanding year in 2007, as overall PC shipments reached over 88 million units, an increase of 15.9% year-on-year. Growth was driven by the continued notebook momentum in Western Europe, which propelled notebook sales growth to 36.4% year-on-year across the region, as well as continued market expansion in Central Eastern Europe and Middle East and Africa at 26.7% and 18.4% respectively.

2007 proved to be a strong year for the notebook industry, with increasing vendor push and intensifying competitive and pricing pressure driving renewal of the notebook installed base in Western Europe and accelerating notebook adoption in CEMA. Transition to mobility was particularly strong in the consumer segment, with EMEA consumer notebook sales expanding by 46% year-on-year. As a result, notebooks overtook desktops for the first time in the EMEA consumer PC market, with close to 21 million consumer notebooks shipped versus 16.5 million consumer desktops.

"IDC expects 2008 to be another buoyant year for the EMEA PC market. Notebooks will remain a key driver across the region and further market commoditization will fuel a solid 14.4% growth for total PC sales in EMEA expected to cross the 100 million mark", said Karine Paoli, Associate Vice President for IDC's EMEA Personal Computing group.

"This year will mark further milestones in PC industry. Vendor competition is not expected to soften, particularly in the retail channel with the entry of Dell and Lenovo and Acer's consolidation with Gateway and Packard Bell, while the arrival of lower-cost mobile platforms is likely to add further pressure. As the market expands and new usage scenarios emerge, 2008 will however see the development of increasing user segmentation and branding differentiation, while the convergence expected to accelerate this year between PC and Telco players will offer new business model and routes-to-market opportunities", she added.

"In Western Europe, renewals, multi-equipment homes and further portable adoption will help maintain strong notebook momentum, with sales forecasted to grow by over 20% in 2008 - however the sustained appeal of notebooks will continue to inhibit the recovery of the desktop market, expected to further contract overall at -2.6% in 2008", said Eszter Morvay, Senior Research Analyst for IDC's EMEA PC group.

"Notebook demand in the consumer and SMB segments is expected to remain the key engine of growth in Western Europe. Stimulated by an increasing need for differentiation as the market commoditizes, new multi-branding strategies in the retail will enable vendors to target groups of customers more effectively and to better balance price points by diversifying their offerings based on usage scenarios. Furthermore the market will continue to see fast technology adoption, allowing vendors, along with design, to differentiate new models", she added.

Adding to healthy consumer trends, the SMB market will remain a key opportunity for growth in Western Europe, in particular around mobility. As the notebook installed base continues to grow, the segment presents increasing vertical opportunities and vendors will need to further tailor their strategies to better address SMBs' needs with dedicated products, support and services. 2008 will also benefit from the current replacement cycle in the corporate space, which has started to take place in 2007 and due to peak throughout 2008, contributing to generate desktop volumes and add incremental growth in the notebook space while client virtualization will remain a major development direction and drive continued infrastructure investment.

"Central Eastern Europe and Middle East and Africa will continue to maintain strong momentum, with PC market growth forecasted to reach 20.1% and 20.4% respectively in 2008", said Stefania Lorenz, Research Director, Systems, IDC CEMA. "With many first-time buyers opting straight for mobile platforms, notebook adoption will remain the key engine of growth in the coming quarters, however unlike Western Europe, CEMA will continue to see healthy desktop demand as well, with customers benefiting from localized offerings and the prevailing cost advantage to notebooks", she added.

As the market expands and continued price erosion make computers affordable to an ever-wider customer base, 2008 will undoubtedly see further commoditization of the EMEA PC market.

Price will remain a key traffic and volume generator, particularly in the retail, with large notebook promotion deals sold at spot prices, and notebook ASPs are expected to drop by another 12% this year, while weak desktop demand levels and bidding wars for corporate tenders will also continue to push desktop prices down.

The arrival on the market of lower-cost systems is likely to add further pressure but will contribute to the continued expansion of the market from a product and usage scenarios standpoints.

The parallel development of increasing partnerships between Telco operators and PC manufacturers, both looking for new sources of revenue, will also create new opportunities and the convergence of the two industries is expected to accelerate in 2008. Throughout 2007, the market has seen several initiatives, both government and operator subsidized, bundling broadband connectivity with laptop sales. With the increasing traction of these programs, telcos will be looking to work with an increasing number of PC manufacturers while PC vendors will be looking for telcos as a new route-to-market to reach customers.

Although this model is targeting the consumer and SoHo segments primarily, connectivity will clearly remain crucial in the SMB space as well. With the integration of various wired and wireless connectivity options, along with Intel's push of WiMAX support within the new Montevina platform, commercial notebooks are becoming all-round communications platforms. Whilst next-generation 3G antennas are already being integrated as standard, the industry will increasingly join efforts to drive mobility to the next level through embedded solutions.

Those developments will need to be part of vendors' focus this year as market commoditization and price erosion will continue to constrain revenue growth, expected to reach 3.4% in Euro terms in 2008 across EMEA, and will require vendors to develop stronger branding and up-sell strategies, increased focus on vertical and niche markets while looking at new opportunities for growth.

IDC's EMEA Quarterly PC Tracker gathers and analyses PC market data in 55 countries, by vendor, product category, sub form factor, brand, user segment, channel, processor, and notebook screen size. The research includes historical and forecast trend analysis as well as price band and installed base.

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