S&P: Pressure Builds On PC Industry

Despite strong unit sales in 2005, expect downward pressure on prices and growth in 2006, said Standard & Poor's in its semiannual survey of the personal computer industry. Unit sales growth reached 15% in 2005, according to the New York-based company, which provides independent credit ratings, indices and investment research.

Indeed, despite strong unit sales in the current year, pressure on sales growth already has taken a toll. Price points for desktop computers have dropped below $500, with notebook computers following a similar trend. These facts have led to dollar sales growth of just 5% in 2005, despite healthy unit growth, Standard & Poor's reports.

In addition to lower sales growth, S&P identified cyclicality as another factor impeding growth in 2006. "Typically, upgrade or refresh cycles in the PC industry last about eight to 10 quarters," says S&P analyst Megan Graham-Hackett. "The PC industry witnessed its 10th straight quarter of double-digit growth in the third quarter of 2005, and now we believe unit growth rates will come under pressure, with likely deceleration ahead."

Standard & Poor's predicts worldwide PC unit growth of 9% in 2006, with the strongest growth coming from outside of the U.S.

S&P's industry surveys are available for purchase at http://sandp.ecnext.com

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