Mumbai:

The public sector and small-business segments continue to spend for the moment but the return of investment by medium and large-business has been very slow, particularly in the United States and Europe. Consumer demand, which accounts for roughly a third of PC shipments, also remains weak.

''The momentum we saw coming into the second quarter has all but disappeared as businesses continue to postpone PC investments and consumer spending has slowed,'' said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. ''Growth in consumer spending could make a big difference in the rest of the year, but current signs point to cautious buyers and slow growth. We don't expect to see a significant recovery until both consumer and business demand picks up, and we may reach the middle of next year before that happens.''

''The higher cost of capital brought about by the continued decline of the stock market has sustained a note of caution in US corporate IT spending,'' said Roger Kay, director of Client Computing at IDC. ''Despite fluctuations in consumer confidence, the employment picture, which has remained depressed, is dampening consumer PC spending. Saturation is also increasingly a factor, as the mature US market swings over more fully to a replacement model. To remain viable, vendors will have to adapt their distribution strategies to these new realities.''

Regional outlook

United States - Business demand improved but remained negative in the second quarter indicating that major IT investments will be postponed till stronger profits and a more robust stock market are seen. The consumer market is expected to show seasonal increases in the second half, although growth will be less than expected.

Western Europe - The market continues to suffer from slow business and consumer demand in the second quarter of 2002. Although a gradual recovery is expected in corporate demand towards the end of the year, the prospects of a major rebound are limited.

Japan - The Japanese market almost reached expectations despite distractions from World Cup Soccer and short-term price increases. Nevertheless, the market remains weak, and problems in the banking sector threaten to further disrupt the market. If the economy and banking sector hold up, we should start to see positive shipment growth in 2003.

Asia/Pacific - Most countries have moved back into growth mode following a quarter or more of declines. Although a few markets remain depressed, a return to growth in most countries, and continuing growth in larger markets such as China, Australia, and India will keep regional growth above 10 per cent for 2002.

US and worldwide unit PC shipments and growth, 1999-2003

Region	1999	2000	2001	2002	2003
USA units (millions)
Consumer	17.7	19.3	15.5	15.7	15.9
Commercial	30.9	32.7	30.5	30.6	32.3
Total	48.6	52.0	46.1	46.3	48.2
Worldwide units (millions)
Consumer	41.4	52.4	47.2	47.6	51.0
Commercial	79.2	87.5	86.9	87.9	96.0
Total	120.6	139.9	134.1	135.5	147.0
USA growth (%)
Consumer	41.0%	9.2%	-19.6%	1.2%	1.2%
Commercial	13.0%	5.6%	-6.6%	0.1%	5.7%
Total	21.8%	6.9%	-11.4%	0.5%	4.2%
Worldwide growth (%)
Consumer	47.2%	26.6%	-9.8%	0.9%	7.1%
Commercial	14.4%	10.5%	-0.8%	1.2%	9.2%
Total	23.9%	16.0%	-4.2%	1.1%	8.4%

Source: IDC, September 2002

IDC's Worldwide Quarterly PC Tracker gathers PC market data in 55 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.