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Bleak Sales Forecast for PCs Through 2018

Stocks in this article: MSFT HPQ

NEW YORK ( TheStreet) -- More bad news for the personal computer industry: According to the latest data from International Data Corp., PC shipments worldwide were off nearly 10% percent in 2013 and the outlook for the next four years isn't much better.

IDC's numbers showed global shipments fell by a total of 9.8% in 2013, continuing the trend reported the year before. The company's experts believe those numbers will fall another 6% this year and continue to decline at least through 2018.

While actual sales figures in the fourth quarter turned out to be slightly better than originally predicted, 2013 will go down on record as seeing "the most severe contraction on record," according to IDC.

The report stated the problems are centered in "emerging markets" where competition from other computing devices (such as increasingly affordable smartphones and tablets) as well as regional economic pressures continue to affect global PC shipment numbers. PC sales decline of 11.3% overall in emerging markets in 2013.

IDC analyst Loren Loverde, vice President of Worldwide PC Trackers, believes "emerging markets used to be a core driver of the PC market. At the moment, however, we're seeing emerging regions more affected by a weak economic environment as well as significant shifts in technology buying priorities. We do expect these regions to recover in the medium term and perform better than mature regions, but growth is expected to stabilize near zero percent."

Lower sales in emerging markets is having an effect on big PC manufacturers such as Microsoft (MSFT), Hewlett-Packard (HPQ), Acer, Asus, Dell and especially Lenovo, which had seen improved overall shipment numbers in the past few quarters.

IDC found that in "mature markets" fourth-quarter shipments rose slightly due to the impending "end-of-life" coming for Windows XP. The 13-year old operating system is scheduled to finally be abandoned by Microsoft on April 8. As early as this weekend, XP users will begin receiving online warnings that it could be time to consider upgrading to a much more modern operating system. Microsoft wants businesses and individuals to get Windows 7 and 8 in the form of a software upgrade or as part of buying a new computer. The surge in XP replacement sales isn't expected to affect PC shipments in the long term.

IDC isn't very optimistic about what will happen to the PC business in the next four years. It expects the rate of decline to slow through 2018 when desktop PC shipments will still decline 1.5%, and although portables (laptops/notebooks) sales will rise slightly, overall the total PC business will be off 0.2%.

That means global personal computer shipments will slip below 300 million this year and will continue to fall through 2018.

-- Written by Gary Krakow in New York.

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