PC demand is up, despite corporate slowdown

According to new reports by research firms Dataquest and International Data Corporation (IDC), fears that PC growth will slow in the coming days are unwarranted. Indeed, the companies say that consumer demand for personal computers is at all-time high, and will offset any doldrums in the corporate market through the end of the year. So companies that rely heavily on corporate sales--such as Dell Computer--may experience some sales growth slowdowns in the coming months, but PC makers with more diversified offerings should continue to see solid growth. The research firms base their predictions on third quarter sales, which strongly suggest that the PC still has a long life ahead of it.

"Concerns about the strength of the PC market appear to be more vendor and segment specific," says IDC's Loren Loverde. "The global PC market is made up of many geographic, customer and product markets, many of which continue to show strong market growth." In the United States, where more than half of all homes already have one PC, growth is slowing, though many people are adding a second machine and relegating the old one to their children. And with the Christmas buying season heating up, consumer PC sales are expected to rise dramatically again. Microsoft's new consumer version of Windows, dubbed Windows Me, will see strong sales because of this phenomenon.

The slowdown in the corporate market is blamed almost solely on Windows 2000, a capable but massive upgrade to the stalwart Windows NT used by many companies. Faced with the complicated undertaking of upgrading their networks to Windows 2000, many companies have simply opted to wait, rather than jump headfirst into unknown territory. Most of the biggest wins for Windows 2000 have come from corporations that needed to upgrade older PCs anyway, and IDC sees this trend continuing in the future: Windows 2000 will be adopted, but it's not going to happen all at once. "There is no Windows 2000 tidal wave that's building here," says IDC analyst Bruce Stephen. Dataquest agrees, noting that Windows 2000 will see its biggest gains in 2001. "Next year is a period when many old machines will be replaced as outdated," says Dataquest's Charles Smulders.

But Windows 2000 is already showing some signs of eating into NT's marketshare. According to Web survey company StatMarket, NT 4.0 usage has slipped 17 percent since Windows 2000 was released in February, though the company won't release its official Windows 2000 usage figures until November. But NT's drop from 7.25 percent of all Web users in February to 5.99 percent in October is almost certainly due to increased use of Windows 2000, as Windows 2000 is the next version of NT. "The introduction of Windows 2000 appears to have taken a small bite out of Windows NT's Web usage share," StatMarket VP Geoff Johnston says, hinting that more details are forthcoming

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