Despite 2Q Slowdown, Consumer Notebook Demand Will Keep PC Growth Positive in 2006

With growth stagnating at 0.5% in 2Q06, Western European PC shipments experienced weaker trends than anticipated. The market suffered from lackluster commercial activity and slowing consumer demand across the region, as the World Cup contributed to divert consumer attention away from personal computing to consumer electronics, especially LCD TVs, which benefited from mass promotion around the World Cup theme. Shipments were also constrained by increased inventory levels in the distribution and retail channels, following a build-up of stock in the previous two quarters. The gradual stock reduction that took place in 2Q06 impacted new orders and led to a weaker than expected performance in 2Q in Western Europe. Nevertheless, portable adoption continued unabated, with sustained double-digit growth in notebook sales. Home purchases remained the key engine behind this growth, with consumers benefiting from aggressive promotions and price cuts.

Despite the softer trends in 2Q06, IDC's outlook remains positive for the forecast period. "Driven by buoyant consumer notebook demand, overall market growth in Western Europe is projected to reach 5.8% in 2006 and 9.6% in 2007," said Eszter Morvay, research analyst for IDC's EMEA Quarterly PC Research Group. Key growth assumptions for 2006?2007:

"Following a temporary slowdown during the World Cup, consumer demand will stabilize in 2H06, but will be geared mostly towards portable form factors. With demand remaining highly price elastic, intense vendor competition and aggressive pricing practices will continue to drive notebook sales. Consumer desktop demand will remain lackluster in 2H06, despite aggressive promotions and price cuts expected in the back-to-school and Christmas seasons," said Morvay.