JP Morgan hardware analyst Mark Moskowitz this morning cut his estimates for PC sales this year, warning, “It’s bad out there,” because “broader PC demand conditions are further softening.”
Moskowitz cut his estimate for PC unit growth this year to 7% from a prior 9.5%, from 383.93 million units shipped to 375.3 million units, with a lower estimate for both desktops and notebooks. He now sees 3% revenue growth for the industry, down from 4.5% previously.
China is the main culprit: “The region had been the growth engine for PCs over the past couple of years. Currently demand has stalled out in that region and potential remedies could be deferred.” I would note that Hewlett-Packard (HPQ) last week reported weaker-than-expected results for its sales into China, but not much was made of it at the time, the sense on the Street being that it was an issue specific to HP.
Moskowitz adds, “Growth is slowing in [China's] Tier 1 through 3 cities, and end demand has collapsed in Tier 4 through 6 cities. No specific sources are cited for the diminished China outlook. The country represents about 20% of PC units, he notes.
Other factors Moskowitz cites include the weak consumer PC reports by HP and Dell (DELL) in their respective quarterly reports, and, “the ongoing tablet invasion has resulted in consumers deferring PC purchases.
With a slew of new tablet offerings expected post the release of Google’s (GOOG) Android 3.0 operating system (Honeycomb) this spring, we expect consumers to become even more distracted by the tablet invasion, which stands to hurt PC sales growth potential.”
In a separate note today, Moskowitz lifted his tablet computer forecast from 46 million this year to 47.9 million units shipped. For next year, he is modeling 79.6 million units, up from 78.2 million previously. Out of the 2012 total, 35% of tablets sold will represent cannibalization of PCs, he writes. Moskowitz sees tablets becoming a $35 billion annual revenue opportunity by next year.
Moskowitz also, by the way, sees Apple (AAPL) hanging onto 60% of the market in 2012. “Our assumption is that Apple’s dominance will remain firmly intact in the near to mid-term, but gradually, ethnology improvements and component cost declines will enable competitive offers to loosen some of Apple’s grip.”
And lest you consider corporate purchases a bastion of safety, Moskowitz also cut his enterprise PC sales growth projection to 7.7% from 9.2%, arguing that corporations are seeing longer useful lives in the PCs they own, thereby stretching out the replacement cycle.
Source:http://blogs.barrons.com/techtraderdaily/2011/02/28/pcs-jp-morgan-cuts-est-on-china-rising-tablet-forecast/
