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Holiday Shoppers Seen Swinging Away From Computers

9/15/2006 01:00:00 PM Eastern

Stamford, Conn. — The research firm Gartner said battle lines are being drawn between PCs and LCD TV for this holiday season and it is likely the computers will come out on the losing side of that fight.

Gartner analysts expect computers will have a tough time competing for the consumer’s dollar because LCD TV prices, backed by aggressive marketing plans, will attract more holiday shoppers.

“Even the latest multifunction mobile phones could pose a threat with some buyers considering the prices of these phones and accompanying service contract is increasingly on par with low-end PCs. Vista’s absence will definitely make it harder for PC vendors to maintain consumer interest in PCs without cutting prices,” said Gartner’s George Shiffler, research director, client platforms research program.

This scenario will not affect worldwide computer unit shipments. Gartner is forecasting a 10.5 percent increase in computer unit growth with a total of 233.7 million expected to be shipped in 2006, however the increase will not offset falling prices and revenue will fall 2.5 percent to $198 billion. Lower pricing will help spur some sales in the United States and other developing markets, but these areas are becoming saturated and the lack of a compelling reason, like Vista, to upgrade their PC will limit customer interest.

Even with Vista Gartner expects PC sales to slow to single-digit growth next year. “Vista’s eventual release next year could stimulate some added growth, but we remain skeptical of Vista’s impact,”Shiffler said.

The downturn in pricing will prove useful in boosting sales in developing regions around the world, the company added.