There is a finite limit to the amount of PCs a person needs. You can make a case for a desktop and a notebook as well and that is it. Although the population and potential of China is immense it is finite. And it is slowly getting to saturation point on PCs.
Yes, the market will grow. But not at the same rate that it has grown in the past. China is, for the first time, showing signs of faltering on the personal computer front. This does not mean it will stop growing. Just that it will stop growing at such an amazing scale and an oversupply of personal computers is already with us.
Two things happen. The first is the smallest players go to the wall. The second is prices, already with squeaky small margins, come down.
According to CCID Consulting, sales of hardware, software and IT services reached $15.8 billion in the first six months of 2006 with a growth rate of 15.8%.
Desktop shipments rose 17% year-on-year to 4.1 million units, but revenues only grew by 11%. Which means profits are shrinking.
Computer monitors had a a negative 4.8%. These figures may be skewed by the slow death of the cathode ray monster and its replacement with LCD screens.
While China may continue to be loyal to desktops the rest of the world is moving to laptops which are now, for the first time, outselling desktops.
Most of China’s vast array of PC and component makers are focussed on desktops.
Lenovo, has a serious direct export market — thanks to its acquisition of IBM’s PC division —but it also has an image problem outside of China.
Australian Connection Research Services (partially on my suggestion) recently completed a survey of personal computer sales in Australia. Only three out of over 1,000 respondents knew of Lenovo. This is a reflection of what appears to be a worldwide situation.
Lenovo is clearly relying on the 2008 Olympic Games, of which it is a sponsor, for a push forward. The Olympic Games may no longer hold the magic they once did. If this is true Lenovo could have serious problems.
Source: Business Week