Desktop market lags in the IT hardware race

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Over the past three years laptops have been forecast to outsell desktops. And recently they have. For the first time during the third quarter of 2007 sales of notebook PCs overtook sales of desktop PCs in Europe, Middle East and Africa (Emea) further demonstrating the popularity of mobile computing.

The desktop segment continues to reel from the stagnant if not negative growth, says Krishna Murthy, Deputy Managing Director of the Acer Computer, Middle East, Turkey and Africa.

“The worldwide IT industry is growing at close to 14 per cent year-on-year. But the desktop segment is not growing at all. In some markets, it has negative growth, whereas the laptop segment has been growing significantly,” Murthy told Emirates Business.

He said the laptop growth in the Emea region has grown by 36 per cent last year, the fourth year of more than 30 per cent growth.

Acer holds the number one position for notebooks with a market share of 20.9 per cent and year-on-year growth of 45.3 per cent in the Emea region.

International Data Corporation (IDC) places Acer as the number two IT vendor for Emea, after HP, with a market share of 12.8 per cent up from 10.6 per cent in 2006. 

Globally, laptops will overtake desktop PCs as the dominant form of computer in 2011, said a report by IDC analysts.

It said the demand for bulky machines will continue to grow slowly but at a declining rate. As portable machines become quicker and more efficient manufacturers are also fuelling demand by tailoring products to cater to the individual needs of their customers – from fashionistas to students. 

The report predicts the laptop market will grow by 16.1 per cent year-on-year until 2011, compared to 3.8 per cent for desktop PCs.

The gradual shift away from fixed machines may reflect the needs of an increasingly mobile workforce and the ubiquity of wireless networks, it added.

A recent US survey by the Pew Internet and American Life Project found that the number of internet users with wireless at home nearly doubled, from one out of 10 in January 2005 to one in five by December 2006. The same survey found that 80 per cent of laptops had wireless capabilities and 88 per cent of laptop users used a wireless network at home. The report from IDC indicates that the appetite for computers on the move is set to continue.

“As we have seen, the demand for notebooks has continued to rise across the Emea region – a traditional stronghold for mobility adoption. Notebook shipments exceeded expectation in the third quarter of 2007, recording about 45 per cent growth year on year,” said Samir Al Schamma, Intel General Manager, GCC.

“This trend is likely to continue across the Middle East as notebooks become faster, lighter and more energy-efficient, encouraging consumers to experience the full benefits of mobile computing,” Al Schamma said.

PC PERFORMANCE

Disregarding the battle between the laptop and the desktop, the PC market as a whole is expected to break records this year.

Shipments into Europe, Middle East and Africa (Emea) are expected to cross 100 million units this year, an increase of 8.65 per cent compared to more than 92 million units in 2007, according to research firm Gartner.

“Strong demand from the consumer segment has led to the growth of the mobile PCs while demand for desktops is slowing down the years. Despite desktop demand waning, they are not going to disappear from the market so soon,” said Ranjit Atwal, principal analyst for Gartner’s Client Computing Markets group in Emea.

According to company’s preliminary results of sales and orders, shipments into the region rose 14.66 per cent from 80.25 million in 2006.

“The Emea region continued to be the largest PC market in 2007 followed by Asia/Pacific while markets such as United States are experiencing slower growth,” Atwal said.

The total value of the PC market in 2008 is expected to reach $91 billion, (Dh333bn) an increase of 7.05 per cent compared to $85bn in 2007.

The Emea contributed 33 per cent to the global PC market value in 2007, of which 15 per cent came from Middle East and Africa.

The Gartner’s analyst said the fourth quarter of the year saw continued growth in notebooks, but desk-based PC growth was weaker than expected for many vendors.

The industry ended the year with fourth quarter PC shipments of 28.8 million units, a 12.5 per cent increase from 25.6 million units registered in the fourth quarter of 2006.

Hewlett-Packard had a strong quarter and increased its market share to 20.2 per cent. HP’s shipments stood at 5.8 million units compared to 4.67 million units in 2006, with 24.3 per cent growth year on year.

That was followed by Acer with 4.07 million units in fourth quarter 2007. The Taiwanese firm registered solid consumer mobile PC growth in Emea and United States due to the acquisition of Gateway and Packard Bell. It had a market share of 14.1 per cent in the quarter and a 23.2 per cent growth year on year.

Dell continued its upward growth trend, finishing the year closer to the Emea market growth rate as its mobile PC performance continued to improve. US firm’s shipments in fourth quarter stood at 2.74 million units compared to 2.51 million units in 2006 with a market share of 9.5 per cent and 9.4 per cent year-on-year growth.

Worldwide PC shipments totalled 271.2 million units in 2007, a 13.4 per cent increase from 239.2 million units registered in 2007.

HP extended its lead in 2007 as it accounted for 18.2 per cent of global PC shipments followed by Dell with 14.3 per cent and Acer with 8.9 per cent, but Acer recorded the fastest year-on-year growth in Emea and in the rest of the world.

Acer shipments grew 32.9 per cent globally followed by HP with 30 per cent and Lenovo with 20.9 per cent. In the Emea, Acer shipments grew 36.3 per cent followed by HP with 27.4 per cent and Toshiba with 26.1 per cent.

DESKTOP REBOUND

Despite the decreasing popularity of the bulky machines, Murthy said desktops would grow in the mid term.

“I would not say the desktop segment is going to die. It’s market will continue to dip in the near term but within the next three to five years you will see the desktop market creeping up by about 10-15 per cent,” he said.

He said the growth would be driven by the expansion of the region’s commercial small and medium as well as large-scale businesses.

“In the commercial segment, there is still no need for laptops because theirs is more of a computer requirement. And for that requirement, you do not need a mobile computer,” Murthy said.

Security is another reason he said, citing call or BPO centres and accounts offices as examples.

“From a company’s perspective, they would not give a laptop to this kind of workforce,” he added.

Desktops also have the advantage over laptops in that the spare parts and extensions tend to be standardised, resulting in lower prices and greater availability. For example, the form factor of the motherboard is standardised, like the ATX form factor. Desktops have several standardised expansion slots, like PCI or PCI express, while laptops only tend to have one mini PCI slot and one PC card slot (or ExpressCard slot).

This means a desktop can be customised and upgraded to a greater extent than laptops. Procedures for (dis-)assembly of desktops tend to be simple and standardised to a great extent too. This tends not to be the case for laptops, though adding or replacing some parts, like the optical drive, rechargeable battery, hard disk, and adding an extra memory module is often quite simple.

Another advantage of desktops is that power consumption is not as critical in a desktop because a desktop is not powered by a rechargeable battery and there is more space to remove the heat. Due to this, both Intel and AMD manufacture special CPUs for laptops with lower power consumption – but then they have lower performance levels.

“There are also other issues like the cost of maintenance,” Murthy said, adding: “The cost of maintaining laptops could be more because they are more prone to breakage and mishandling. Connectivity is also a problem.”