Not that long ago, Americans couldn’t buy PCs fast enough. The industry has enjoyed a robust 15 to 20 percent growth rate since the mid-’90s, and today, 57 percent of households own a computer, according to Odyssey, a research firm. But the unwired minority will be a hard nut to crack, says Gartner Dataquest analyst Martin Reynolds. “We’re looking at households that have very limited resources or have no need for a PC.” As a result, data firm IDC scaled back its predictions for growth in the U.S. market and now thinks sales this year will increase by only 12 percent–while Reynolds speculates growth could stop altogether within two years.
Another factor contributing to the slowdown is that even the cheapest PCs today have the memory and processing muscle to run most software and connect to the Net. Consumers are therefore buying cheaper models, which translates into a lower average selling price and meeker profits.
Gateway CEO Jeff Weitzen said as much last week. He announced his company had actually met earnings estimates, but he credited non-PC sources of revenues like consumer-training programs and Internet access, which now account for half the company’s profits. “There is no doubt that the traditional PC industry, where we just pushed the latest and greatest hardware… out the door is rapidly changing,” he said. In other words, the PC business is a pretty volatile place to be these days.
