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Thursday, 1 November, 2001, 05:34 GMT
Tech firms face months of gloom
A PC being used in the home, BBC
PCs are not proving popular with consumers or companies
The technology industry is showing few signs of recovery.

More bad news was delivered this week by market research firm Gartner Dataquest, which revealed that the number of PCs shipped in Western Europe had fallen for the second consecutive quarter.

Over the last three months, the shipments of PCs in Europe fell by 11% compared with the same period in 2000.

The fall was blamed on large companies postponing or cancelling orders and smaller organisations deciding they did not need new computers.

No money for machines

The last six months have been difficult for technology firms as the hangover from the dot.com debacle stubbornly fails to lift, and the threat of a wider recession makes customers reluctant to splash out on new hardware and software.

Strong evidence for the continuing slump has been revealed by figures gathered by Gartner Dataquest showing that the number of PCs shipped to homes and businesses over the last three months has fallen.

PC shipments - key countries
Germany -15.2%
UK -12.2%
France -12.4%
Italy +10%
Russia +50.4%

The biggest fall was recorded in Germany where shipments were down 15.2%. The only regions taking on more computers than during the same period last year were Italy (up 10%) and Russia (up 50.4%).

The figures reveal a worrying trend. In the second quarter of 2001, although there was a fall in the total number of PCs shipped, businesses actually bought more than during the same period in 2000.

This time shipments were down to both businesses and homes. Compared with the same period last year the number of PCs shipped to companies and consumers was down 4.3% and 10.7% respectively.

"It has got a lot worse," said Brian Gammage, principal analyst at Gartner Dataquest.

A copy of the home edition of Microsoft Windows XP, PA
Not even XP can help the ailing technology market
He said the same companies reporting lower turnover and laying off staff were the ones which would usually be ordering PCs.

The slowdown in shipments has not been felt equally by all PC makers. Gartner Dataquest said that companies such as Compaq, IBM and Fujitsu-Siemens saw shipments shrink by more than 10%.

By contrast Hewlett-Packard shipped the same number of PCs as in 2000. Dell even managed a modest increase and now ships 8.6% of PCs in Western Europe.

Mr Gammage said the launch of XP was unlikely to stop the decline because few companies were planning to migrate to the new software in the near future.

The good news is that things have got as bad as they are going to get. "We think growth rates have now probably hit the bottom," said Mr Gammage.

Growth is expected to be static during the next six months, and only pick up before the third quarter of 2002.

By that time, said Mr Gammage, PC makers' customers were expected to have completed their cost and job cutting programmes and have some cash available to spend on new hardware.

But Dell vice-president Simon Calver painted a more positive picture.

"Christmas is a key purchase occasion for consumers," he said, "they are not as budget or infrastructure dependent as the corporates."

He added that many large companies spent heavily before 2000 in an attempt to beat the Millennium Bug. By early next year the same companies may start replacing the desktop machines they bought back in 1999, which are now old and possibly underpowered.

See also:

03 Aug 01 | Business
Tough times for PC firms
24 Oct 01 | Sci/Tech
Microsoft's XP extends reach
16 Aug 01 | Business
Profits slump at tech giants
05 Sep 01 | Business
Jobs slashed in biggest PC merger
08 Aug 01 | Business
20-year-olds ponder life without PCs
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