Gartner: 4Q Global PC Sales Will Be Better Than ExpectedGartner: 4Q Global PC Sales Will Be Better Than Expected

PC sales will be even stronger in the last quarter of 2003 than expected, research firm Gartner said Friday--but it warned against getting too excited about the good news.

Gartner, which regularly issues PC shipment forecasts, revised earlier fourth-quarter estimates to account for better-than-anticipated sales in the third quarter.

According to Charles Smulders, VP of Gartner's computing platforms worldwide group, global PC sales should total 47.2 million units in the fourth quarter of 2003, a 12,4% increase from the same period last year.

"The third quarter was significantly stronger than we expected," he said in explaining the rationale behind the revised estimates. "We see the third quarter results as an encouraging sign" for continued growth."

For the year, Gartner now is betting that total PC sales worldwide will exceed 164 million, an increase of 10.9% over 2002. As recently as September, prior to finalizing its numbers for the third quarter, Gartner was saying the year-end sales would not break the double-digit mark, but stall at just over 8% above last year's shipments.

Another way of looking at the numbers, said Smulders-and one that may give a more accurate picture of the continued uptick in PC sales-- is that the double-digit growth in both the second and third quarters of this year represent the first time that sales have posted such gains since 2000. If Gartner's fourth-quarter projections hold true, 2003 would end with three consecutive quarters of double-digit growth, a sure sign that the recovery in IT--at least in unit sales--isn't a fluke.

But in a kind of good news-bad news spin, Smulders also warned against what he called "over exuberance" about the data. Several factors could intervene to spoil the rosy picture.

"We've seen very little activity in enterprise sales," he said. The only exception is Europe, which is enjoying the benefit of the appreciation of the euro against the dollar--and the resulting lower prices for U.S.-made goods.

Demand among large business accounts remains lackluster. "The enterprise market is still one where only select replacements are being made," Smulders said. Most of the upswing in sales, in fact, is coming from the small business, home, government, and education markets, not large companies.

Other issues that might put a damper on sales during the fourth quarter include higher PC retail inventory levels than this time last year, and a possible fragility in the U.S. home-PC market, which got a boost in the third quarter from tax rebates and lower tax-withholding rates. "Historically, the home market has more erratic growth patterns than corporate sales," he said.

And there's always history. In two of the past five years, Smulders noted, demand in the fourth quarter dropped after strong third quarters. In other words, just because the third quarter was strong doesn't mean the fourth necessarily follows suit.

"Consider this good news," he said, "but cautiously good news."