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| Pricing Pressure in the U.K. PC Market to Continue Throughout 2008 The U.K. PC market demonstrated solid performance in 1Q08, as overall PC shipments for the quarter reached more than 3.25 million units, an increase of 14.3% year on year. Mobility continued to be the key driver, as the notebook market grew by a very healthy 41.8%, thanks to renewals, further expansion of the installed base to new buyers, and multiple-equipment purchases. Due to the rising popularity of portable PCs, desktop sales continued to decline, particularly in the consumer and SMB segments, as many users chose to replace their existing deskbound systems with notebooks. "Demand for notebooks, stimulated by fierce vendor competition and aggressive pricing, will remain a key engine for growth throughout the year", said Lucie Jichova, research analyst for IDC's EMEA PC research group. "Economic pressure will continue to drive cautious spending behavior, but the arrival of low-cost ultraportables, increasing traction of telco bundles, and mobile solutions in the business space, will maintain strong momentum in the notebook market in the second half of the year." According to IDC's latest forecast, notebook shipment levels are set to show growth levels of 35.5% this year, while desktop volumes are expected to sink further, with an annual decline of -8.3%. "Demand levels for desktops in the SMB and consumer segments remain lackluster. In order to maintain sales volumes of consumer desktops, PC manufacturers will increasingly focus on home entertainment solutions and gaming machines", said Jichova. "Consumers are going to benefit from attractive notebook offers as competition among vendors in the retail channel intensifies. Furthermore, the rising availability of deals that bundle Internet subscription with free notebooks will create further pressure on other channels to bring prices down. In the U.K., consumers tend to focus on cost rather than specifications. Recently, we have seen an introduction of affordable ultraportable PCs, which have been very well received by consumers. IDC expects these basic surfing devices will continue to sell extremely well throughout the rest of 2008." As customers have become driven by deals and promotions, the retail environment is becoming more challenging. The latest victim of this pressure is DSG, which has announced plans to close 77 of its Currys Digital stores. Meanwhile, Dell, which formerly focused on direct sales, has successfully entered into the retail channel and doubled its sales of notebooks in the consumer segment. Lenovo is expected to follow suit by the end of 2008, although it does not benefit from the strong brand recognition that Dell enjoys in the U.K. Overall marketing activity in the consumer PC market is likely to be boosted from the second half of 2008, surrounding the launch of new products based on the Intel Montevina and AMD Puma platforms. As a result of this intensifying competitive environment, IDC does not expect pricing pressure in the U.K. PC market to soften this year. The transition to mobility will remain a continuing theme in the SMB market, with the share of notebooks in this segment forecast to show a further increase this year. A key driver of SMB notebook momentum will be renewal of the installed base, which will see many SMBs replacing their desktop systems with portable PCs. Moreover, vendors will continue to reinforce their go-to-market strategies to target SMBs more effectively with dedicated products, support, and services. Corporate renewals gained momentum in 1Q08, and healthy demand for both desktops and notebooks is expected to continue throughout the year, despite the current economic concerns. However, some sectors, such as financial services, are likely to postpone their IT investments. In the education market, some projects are likely to be geared towards mobility, taking advantage of the new low-cost ultraportable offerings. From a channel perspective, increasing momentum will surround the cooperation between PC vendors and telco operators, tapping into new sources of revenue, as the deals that combine Internet subscription with a free notebook are likely to appeal to consumers who have not owned a PC before. Examples of collaboration with telecom operators include Dell's successful relationship with Carphone Warehouse and AOL, or notebook deals offered by PC World with 3's Mobile Broadband. Overall, connectivity will remain crucial - the beginning of 2008 already saw an upsurge in marketing activity around 3G broadband in the U.K. and 3G antennas are now being integrated into portable devices as standard. Furthermore, Intel's push of WiMax support in the Montevina platform will contribute to the effort to drive the range of wireless connectivity options to the next level. write your comments about the article :: © 2008 Computing News :: home page |