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November 07, 2008

Canalys EMEA PC Market Report: So Far, So Good

By Mae Kowalke, TMCnet Senior Editor

Yes, credit is now pretty hard to come by. Yes, fuel prices remain high compared with a few years ago. But no, these and other economic difficulties do not seem to be affecting the market for personal computers (PCs), at least in the Europe, Middle East and Asia (EMEA) region.

That’s according to a report out Friday from industry research firm Canalys, showing double digit growth so far in 2008 for the PC market in EMEA. That’s true for each of the first three quarters, including Q308, which saw 27 percent year-on-year unit growth and 11 percent value growth for the market.
Canalys said one of the key drivers for this growth was the re-emergence of ultra portable PCs (now usually referred to as netbooks) as a high-volume market segment. Meanwhile, desktop and server PC shipments remained stable (3.7 percent and nine percent growth respectively, compared with Q307).
The strength of netbook growth is somewhat remarkable, given that this type of computer, according to Canalys, is mostly a consumer product; apparently not everyone is cutting back spending on their technology purchases.
“This market will grow strongly, but success will depend on developing new sales channels, pricing and product positioning,” said Canalys analyst Andy Buss, commenting on growth for the netbook segment. “With 3G being integrated, mobile operators become an important route to market, but mobile broadband pricing and end-user support are areas that will also require ongoing attention.”
Adrian Drozd, senior analyst at Canalys, said that consumer PC shipments surpassed those of enterprise PCs (46 percent and 15 percent respectively, year-on-year). Netbooks had a lot to do with that growth.
“To put the importance of this new product category into perspective, consumer PC market growth without netbooks would have been just 22 percent,” Drozd said. “So far, netbooks are not cannibalizing notebook sales. But things will change as the market moves beyond the early adopter phase.”
The keyword in the netbook market now is: choice. While the category started small with Asus’ Eee PC launch in March, this segment has exploded in subsequent months, and consumers now have many, many choices if they’re considering buying one of these small computers.
Among the various features now being touted among netbook manufacturers, Canalys said, are larger screen sizes, bigger hard drives, and more models that run Microsoft (News - Alert) Windows. Direct competition with entry-level notebooks is either here, or soon will be.
“PC vendors should leverage the economies of scale that netbooks bring to develop a cost-effective range of small notebooks that target this overlap market,” Drozd said. “Ultraportables have historically been premium products with high prices, and consequently limited sales volumes. This is an opportunity to turn this category around, but vendors should still be careful of moving too quickly to potentially lower-margin products without an associated increase in volume.”
Canalys’ research indicated that the EMEA PC market is dominated by five main players: Acer (21 percent market share), HP (19.4 percent), Dell (9.8 percent), Asus (7.1 percent) and Toshiba (5.8 percent). The “other category” makes up 36.9 percent.
Acer (News - Alert), now in the top spot, and Asus, in fourth place, both increased their standing considerably compared with Q307. Although Asus’ Eee PC might have touched off the netbook revolution, Canalys said that Acer has made this market its own, thanks to the Aspire One.
Still, though, Asus’ growth poses a threat to Dell’s (News - Alert) position in the top three players, and it’s possible the latter company might be knocked down a rung during the fourth quarter of 2008.
“Dell’s initiatives to re-take share have failed and it must look at its manufacturing and go-to-market strategies if it is to remain a top-three player in EMEA,” Buss said.
Canalys did caution that, although the financial turmoil has not yet affected EMEA’s PC market, it could be that the effect is delayed and an assessment at the end of Q408 won’t be quite as rosy.
“The financial crisis has yet to filter into the broader market, but it is likely that there will be some impact in the near term,” Canalys said in its report. “The appreciation of the U.S. dollar means that the aggressive euro pricing seen in the last year will be moderated and price points are likely to remain stable or even increase in Q4 and early 2009.”
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Mae Kowalke is senior editor for TMCnet, covering VoIP, CRM, call center and wireless technologies. To read more of Mae's articles, please visit her columnist page. She also blogs for TMCnet here.

Edited by Mae Kowalke

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