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The outlook for computer hardware sales—desktop PCs, servers and even
notebooks—has grown bleaker for 2009 as demand appears to have dropped out of
the market.

Gartner is now forecasting a drop of 11.9 percent in 2009 from 2008, the
sharpest unit decline in history. Before now, the sharpest decline had been in
2001 when unit shipments fell 3.2 percent. The current forecast decline is
almost three times the previous worst decline.

"The PC industry is facing extraordinary conditions as the global economy
continues to weaken, users stretch PC lifetimes and PC suppliers grow
increasingly cautious," says George Shiffler, research director at
Gartner, in a formal statement issued upon the release of the new forecast.

Click
here to read about PC refresh cycles stretching to five years.

Last week Bernstein Research lowered its PC forecast for 2009 and now
expects unit shipments to decline 7.3 percent for the year. That’s a
significant deterioration from the firm’s November forecast of a 4.9 percent
growth rate for PCs in 2009.

The recent earnings reports from Dell and Hewlett-Packard are cases in point.
HP expects revenue for the full year to decline between 2 percent and 5 percent
from the previous year, including the benefits of integrating its services
acquisition EDS into the mix.

As for Dell, Brian Gladden, the company’s senior vice president and CFO,
recently told analysts, "We cannot predict how deep or long this slowdown
will be, though we’re planning on it to be protracted."

Gartner says that both emerging and mature markets for PCs will suffer
"unprecedented" market slowdowns.

“Growth in both emerging and mature markets will be driven by similar dynamics
even if the precise impacts vary somewhat," Schiffler says. "Slower GDP
growth will generally weaken demand and slow new penetration, lengthening PC
lifetimes will reduce replacements, and supplier caution will keep inventories
at historic lows until confidence in a recovery eventually firms. The impact of
reduced replacements will be especially acute in mature markets, where
replacements are estimated to account for around 80 percent of shipments.”

Netbooks offer the only bright spot in an otherwise bleak forecast, with unit
sales expected at 21 million in 2009, up from 11.7 million in 2008. According
to Gartner, PC unit growth will be substantially boosted by continued growth in
mininotebook shipments; excluding mininotebooks, other mobile PC shipments will
grow just 2.7 percent in 2009.

But while this year looks to be a brutal one for PC sales, Gartner says that PC
makers and their channel partners learned lessons during the 2001 dot-com bust
and recession that have prepared them for survival in 2009. Those include
the knowledge of how essential it is to invest in supply chains. And those
investments give them better visibility into demand, says Gartner.