Slow Growth Forecast for Global Notebook PC Shipments

Weak consumer demand along with the popularity of smartphones and tablet PCs is expected to keep the growth of global notebook PC sales at only a 2% this year, with shipments of 204 million units, a five-year low. The sluggishness is predicted to continue in 2012 in the face of increasing global economic uncertainty, with shipments expected to expand by only 4.4% to 213 million units, according to the Topology Research Institute (TRI), a Taiwanese market research firm.

The revival of the industry will depend heavily on global economic growth, said TRI, which went on to note that the International Monetary Fund (IMF) cut its forecast of global economic growth this year to only 4% in September, signaling a persistently slack consumer market in the year ahead. TRI expects consumer demand to remain sluggish until the fourth quarter of 2012, when the newest Wintel (Windows plus Intel) technological specifications are introduced.

Prospects for the global notebook PC industry will also depend partly on Wintel's new products, Intel's next-generation Ivy Bridge processor and Microsoft's Windows 8, which will offer better power efficiency and improved user interface and are expected to revive the growth of consumer demand for new notebook PCs, stressed TRI.

The rise of emerging markets is another key to the sustainability of the notebook PC business. The U.S. and Europe together absorbed over a half of the world's notebook PCs in the past decade, but persistent unemployment and debt crises caused their share to drop to under 50% in 2010, indicated TRI. Countries in the Asia Pacific, sustained by rapidly growing middle-class copulations, have become the world's largest market for notebook PCs over the past year.

Among emerging markets, TRI predicted that China will lead the growth of global notebook PC shipments starting in the second half of next year at the earliest.

Ultrabook Boom Uncertainty
Despite being heavily promoted by global PC brands in their competition against Apple's Macbook Air, ultrabook laptops, largely because of their high prices, will still need time to be tested in the market, TRI noted.

Endorsed by Intel, a variety of ultrabook laptops with screen sizes ranging from 11 to 14 inches have been unveiled by global PC brands recently, with Acer and Asus already retailing their models worldwide. The ultrabook trend has driven PC parts suppliers to switch part of their production to ultrabook parts.

Acer is an especially striking example of how PC suppliers are betting on ultrabook laptops as a growth restorative, having dedicated itself to the development of ultrabook PCs ever since Intel came up with this next-generation laptop design concept. To gain an advantageous position over its competitors, Acer introduced its ultrabook models to the Chinese market in late September.

Asus has put heavy emphasis on marketing ultrabook PCs, dubbing them “Zenbooks” to help differentiate them from the competition. CEO Jerry Shen confirmed a few days ago that Asus plans to launch five or six Zenbook models worldwide.

TRI thinks that the ultrabook boom is uncertain, however, as consumer-unfriendly ultrabook prices will compromise their marketability. With a thinner size, longer battery life, and speedier performance than traditional laptops, most ultrabooks are produced at high cost using high-grade parts and components and have metal cases processed by CNC (computer numerically controlled) machining, and are priced even higher than the Macbook Air.

TRI pointed out that sales of ultrabooks are unlikely to take off until selling prices are cut to under US$1,000. In addition, PC suppliers will probably be troubled by shortages of key parts and components, especially CNC-machined metal cases, because Apple takes a large portion of the available output of CNC-machined metal cases for its MacBook Air.

Although the launch of Windows 8 is expected to stimulate demand to some extent, TRI believes that ultrabook PCs will be unlikely to become prevalent in the consumer market in the short time and will contribute only 20 million units to global laptop sales in 2012 in view to the failure to cut production costs significantly.

Elusive Tablet Market
After a year of observation, TRI has concluded that the market for tablet PCs, which were once regarded as a new growth engine for the PC industry, has proven elusive for most players, including Hewlett-Packard and Research In Motion.

Apple's dominance of the segment will be almost impossible for any single rival to shake in the near future with the single exception of Amazon, emphasized TRI, because the world's largest e-book content and reader provider has better integrated its online digital content and application service platforms. This factor, along with its budget-priced Kindle Fire, will help Amazon quickly build a huge consumer base in the competitive landscape.

TRI believes that Amazon will experience explosive growth in the market thanks to its service-driven strategy, and that it will threaten Apple in the coming years. Fierce competition between Apple and Amazon will leave other players little room for growth; and so, the TRI feels, notebook PC suppliers will be crowded out of the competition soon unless they come up with new business models for the marketing of their tablet models.

Global PC Shipments
Year	2008	2009	2010	2011 (forecast)	2012 (forecast)
NB Models	142 M. units	167 M. units	200 M. units	204 M. units	213 M. units
Y-on-Y Growth	47.7%	17.6%	19.8%	2.0%	4.4%
Desktop Models	145 M. units	135 M. units	146 M. units	148 M. units	150 M. units
Y-on-Y Growth	-8.0%	-6.6%	7.7%	1.4%	1.3%

Source: TRI