PC Industry's First Decline Predicted 2

PC shipments in the United States likely will decline for the first time ever, sinking 6.3% from 48.4 million in 2000 to 45.3 million in 2001, according to research firm IDC. The firm initially predicted growth of 2.2% in 2001, but continuing economic woes have slowed buying and caused it to revise expectations downward.

IDC predicts U.S. PC shipments overall will show growth again in 2002, but the rate will be just 4.6%, or 47.4 million units. Shipment numbers won't rise above 2000's figures until 2003, when sales should grow 14.2% to 54.1 million.

Shipments are also slumping abroad, and IDC has cut its worldwide growth figure to 5.8%, or 138.9 million units, down from an earlier prediction of 10.3% growth.

In the United States, slumping consumer sales account for much of the decline. IDC says that shipments in the first quarter of 2001 were well below expectations, declining 26.4% from the same quarter in 2000. Overall sales to consumers in 2001 are expected to fall 17.3%. U.S. commercial spending is also on the decline, and IDC predicts shipments to that sector will stagnate at only 0.6% growth.

"We expect IT spending over the next few years to be truly anemic," says U.S. Bancorp Piper Jaffray analyst Ashok Kumar. In March, Kumar was among the first to forecast a sales decline, saying any growth for the year was "highly unlikely," and predicting no recovery until the second half of 2002. Other analysts have forecast single-digit growth for the year. Kumar says PC sales are a leading indicator of the IT industry's decline as a whole, and that when they begin to pick up, that would in turn indicate a recovery in the industry.