PC shipment growth rate awful
In the fourth quarter of 2008, the worldwide PC industry suffered its worst growth rate since 2002, as worldwide shipments totaled 78.1 million units, a 1.1 percent increase from the fourth quarter of 2007, according to preliminary results from Gartner, Inc.
“The United States experienced steeper than expected shipment declines due to the recession. The fourth quarter started out with a relatively optimistic view (in the US), but then it got worse every month. The Europe, Middle East and Africa (EMEA) region was also affected by the economic slowdown across key countries,” said Mika Kitagawa, principal analyst for Gartner’s Client Computing Markets group. “Asia/Pacific recorded the worst shipment growth since Gartner started its PC statistics research. Latin America met expectations, but its growth was much lower than in the past.”
The growth driver for the 2008 holiday PC season was the mini-notebook segment. With more vendors offering creative sales promotions, the mini-notebook segment outpaced overall mobile PC growth. However, PC revenue experienced a record decline. Steep average selling price (ASP) declines, as well as robust growth of low-priced systems, including mini-notebooks, contributed to this drop.
Hewlett-Packard managed to grow above the worldwide average in the fourth quarter of 2008, however its year-on-year growth was its lowest since its merger with Compaq in 2003. HP did well in EMEA by aggressively promoting the mini-notebook segment, but it was impacted by sales in the US market.
Dell showed strong growth in Asia/Pacific, but it struggled to increase shipment volume in North America and EMEA in the fourth quarter of 2008. Acer continued to show exceptional growth with worldwide PC shipments growing 31.1 percent in the fourth quarter of 2008. Acer’s sales were driven by low priced PCs such as mini-notebooks. Lenovo maintained the fourth position in the worldwide market in the fourth quarter, but it suffered a shipment decline for the first time since 2006.
In the fourth quarter of 2008, PC shipments in EMEA totaled 30.4 million units, a 4.9 percent increase from the fourth quarter of 2007. This region had not seen growth rates drop to this level since the 2000/2001 period. The slowdown impacted all countries and segments. The consumer market was the least affected, with mobile PC growth in the high double-digits. However, much of this was due to the continued rollout of mini-notebooks.
For the year 2008, worldwide PC shipments totaled 302.2 million units, a 10.9 percent increase from 2007. The top 5 rankings remained unchanged compared to 2007. Dell recovered from its restructuring process in 2008, showing a slightly higher growth rate compared to the worldwide average. Lenovo continued to struggle outside of China’s market. Its attempt to enter the consumer markets was not successful in 2008. Toshiba grew faster than the worldwide average by heavily targeting the consumer market.
Nortel seeks creditor protection
Nortel Networks Corporation has announced that Nortel Networks Limited (NNL) and certain of its other Canadian subsidiaries will seek creditor protection under the Companies’ Creditors Arrangement Act (CCAA) in Canada. As well, certain of the company’s US subsidiaries, including Nortel Networks Inc. and Nortel Networks Capital Corporation, have filed voluntary petitions in the United States under Chapter 11 of the US Bankruptcy Code, and certain of the company’s Europe Middle East and Africa (EMEA) subsidiaries are expected to make consequential filings in Europe. The company claims that its normal day-to-day operations are expected to continue without interruption.
Nortel believes that these moves will allow Nortel to deal decisively with its cost and debt burden, to effectively restructure its operations and to narrow its strategic focus in an effective and timely manner. Nortel is taking this action now, with a $2.4 billion cash position, to preserve its liquidity and fund operations during the restructuring process.
In Saudi Arabia, Nortel put out the following statement: “We can confirm that Nortel Networks UK has entered administration alongside a number of EMEA entities which are covered under the UK Filing/ Administration Order. Representatives from Ernst & Young have been appointed as joint administrators with the task and purpose of achieving an optimum solution for the company, its creditors, clients, and employees. The joint administrators will be working in unison with the company to help expedite the global restructuring activities. Nortel’s day-to-day operations will continue without interruption so does the company’s commitment to our customers. The scope of the administration order includes Nortel business entities in the following countries: Austria, Belgium, Czech Republic, Finland, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Romania, Slovenia, Spain, Saudi Arabia, Sweden and the United Kingdom.”
Nortel’s statements have been upbeat but analysts at Nemertes Research are more cautious. Nemertes noted that Nortel’s actions considered alongside staff reductions by Alcatel-Lucent and Mitel, indicate that telecom system vendors are facing difficulty as customers slow or delay purchases.
“Nortel will continue to operate as it progresses through Chapter 11. How Nortel restructures is the great unknown. It’s not unrealistic to expect shedding or revamping of business units and product lines,” commented Nemertes Research.
Nemertes analysts advise Nortel customers not to panic, but to prepare a contingency strategy. This includes planning for potential RFPs to evaluate alternative vendors. Those considering Nortel purchases should delay procurement efforts until the restructuring picture clears.
Wii and Nintendo DS tops
Before 2008, no video game system had ever been purchased by ten million Americans in a single year. But according to independent sales data released by the NPD Group, the Wii console from Nintendo did just that, even during these economic times, with 2008 unit sales of 10.17 million. The Nintendo DS portable handheld system came in a close second, with 2008 unit sales of 9.95 million. Each of them broke the previous yearly unit sales record set in 2007 by Nintendo DS with sales of 8.52 million.
Consequently, Wii represented 55 percent of all next generation home console sales in 2008, while Nintendo DS claimed 72 percent of all portable system sales in 2008.
“Our type of entertainment has now moved to the point where there is no longer a question that if you offer consumers an expanded definition of what a video game can be, and deliver that idea with quality and affordability in mind, millions of new people will start playing video games,” said Cammie Dunaway, Nintendo of America’s executive vice president of Sales & Marketing.
According to NPD data the industry’s top selling games of 2008 were Wii Play, Mario Kart Wii and Wii Fit. The industry’s annual revenues jumped 19 percent in 2008 over 2007, and Nintendo products were responsible for 99 percent of those additional retail dollars. Nintendo DS set another industry record for system sales in any month, with 3.04 million units sold in December.
Reseller program for Google Apps
A new program enables technology solution providers to sell Google Apps to businesses around the world. Authorized resellers will be able to sell, customize and support Google Apps Premier Edition for customers of all sizes, creating new revenue opportunities for partners and easier access to Google’s popular cloud services for more businesses.
Google will provide resellers with training, support and tools for sales and marketing, as well as access to tools for integrating Google Apps into their customers’ business operations. Resellers will bill their customers directly, enabling them to retain a close relationship with customers. Resellers can also bundle additional services and support with Google Apps.
The Google Apps reseller program is now accepting applications from interested firms globally. Potential resellers will be evaluated based on relevant experience and credit worthiness, and can learn more at www.google.com/apps/resellers. Authorized resellers will be able to begin selling Apps by the end of March.