Mass adoption of cheap notebooks drives resilience to financial crisis in channel

PC industry thrives amid economic slowdown

While the media is swamped with stories of the credit crunch damaging businesses and individuals everywhere, big name technology firms have released storming quarterly financials in the last month, while PC sales have gone through the roof – prompting industry watchers to assert that our market may be uniquely resilient to the financial pressure sweeping the nation.

In EMEA, total PC shipments smashed expectations with a 24.5 per cent increase in the second quarter of 2008, whilst laptop sales were up 53 per cent year on year, according to figures from IDC.

At the same time the technology giants at the heart of the industry have been posting some very impressive quarterly financials. Microsoft’s Q4 results helped make annual revenues of $60.42 billion – its best recorded since 1999.

Meanwhile Intel achieved its best Q2 ever with revenues of $9.5 billion – up nine per cent on the same period last year – IBM’s Q2 revenues shot up by 13 per cent, and the world’s largest IT distributor Ingram Micro saw its seventh record in a row, breaking quarter with revenues of $9.5 billion.

"The technology industry so far seems to be weathering the storm. I suspect that, unlike industries such as supermarkets and the housing market, it’ll take longer for the credit crunch to bite in the technology sector," said Sarah Kidner, editor of consumer watchdog magazine Which? Computing.

More than anything else, the rush of very cheap PCs in a market where consumer spending across the board is reduced appears to be responsible for the buoyancy of the PC market.

"No retail sector is immune to consumer’s disposable income being reduced, but some are more immune than others. With the PC market, we are still experiencing in value terms very strong growth. In June ’08 we had growth of 51 per cent value," said James Randall, commercial director for GfK Retail and Technology.

"Now the major driver with that and the thing causing the growth of technology market to go further is when the price falls through new ceilings. If you look at just January to June 2008, in the percentage of retail laptops, if we’re calling the entry level sub-£500, that makes up 78 per cent of PCs sold.

"If you compare that to 2006, the figure was 35 per cent. All retail markets will be affected by the reduction in consumer income, but many of the IT markets which still have low penetration and pent up demand will outperform the average."

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