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Monday, March 02, 2009, 08:15 am PT (11:15 am ET)

Gartner predicts sharpest decline in PC sales ever

Worldwide PC shipments will tumble by the largest percentage ever recorded in history this year, with desktops hit especially hard as mini-notebooks boost growth for mobile PCs, according to Gartner.

PC shipments are predicted to total 257 million units this year, which would represent an 11.9 percent decline from 2008, the firm said in a report released Monday morning. That would erase the previous worst decline in 2001 when shipments fell 3.2 percent.

"The PC industry is facing extraordinary conditions as the global economy continues to weaken, users stretch PC lifetimes and PC suppliers grow increasingly cautious," said Gartner research director George Shiffler. "Slower GDP growth will generally weaken demand and slow new penetration, lengthening PC lifetimes will reduce replacements, and supplier caution will keep inventories at historic lows until confidence in a recovery eventually firms."

The research firm believes desktops will decline a staggering 31.9 percent from 2008 while mobile PCs will see help from growth in the mini-notebooks ("netbooks") sector. However, the average price for a netbook is expected to reach $399 even as screen sizes increase, down from a 2008 average of $450, meaning it won't be enough to stem the market's decline. Netbooks will make up a small 8 percent of total PC shipments.

Mature markets are currently the strongest market for the small, low-powered machines, but even emerging markets may have interest as prices keep falling. Netbooks excluded, laptops in general will grow just 2.7 percent, according to the report.

What this will mean for Apple is not yet known, but the Cupertino-based company did enjoy Mac sales growth last quarter despite a contracting overall market.

Apple, starting with chief executive Steve Jobs, has foreseen the decline of desktops for some time, and a shift that firmly took hold around 2005 has led to more notebook sales each quarter than desktops for the Mac maker.

While Gartner's predictions may not inspire confidence, Apple's strength in portables is seen as a positive for its Mac business, which Wall Street analysts have predicted will essentially tread water in 2009. Needham's Charlie Wolf has said Mac shipments will be "flat" this year, while the Royal Bank of Canada's Mike Abramsky offered the opposing view: "Beyond an ongoing transition from desktops to laptops, deteriorating consumer spending in our view materially contributed to slowing Desktop sales."

Finally, Apple executives have repeatedly denied any interest in competing for netbook sales.

"We're watching that space," said acting chief executive Tim Cook, "but right now from our point of view, the products in there are principally based on hardware that's much less powerful than we think customers want, software technology that is not good, cramped keyboards, small displays."

"We've got some ideas here, but right now we think the products are inferior and will not provide an experience to customers they're happy with," he said.