| | Consumer Plans To Purchase New PCs Rise To Highest Mark In Nearly A Year
BY PATRICK SEITZ
INVESTOR'S BUSINESS DAILY
The number of U.S. consumers planning to buy a new personal computer within the next six months rose in February to its highest level in at least 11 months, a new poll shows.
The latest IBD/TIPP Home Computer Purchase Index shows pent-up demand for new PCs. The data indicate that consumers, who account for about 40% of U.S. PC sales, are poised to lead a long-awaited resurgence in this market.
"We are into an upgrade cycle," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence. IBD's polling partner has been collecting PC purchase intent data since April 2002.
In February, 29% of people surveyed said they were either very likely or somewhat likely to buy a PC within the next six months. That figure was 26% in January and 23% in December.
Expressed in an index, the PC purchase intent was 24.5 in February, up from a low of 19.8 in December. The previous high was 23.6 last July. The index ranges from 0 to 100. The higher the number, the stronger the intent to buy a PC. The results are based on a random phone survey of 900 adults.
Factors behind the uptick in computer demand include the aging installed base of PCs and the growth of broadband Internet services and home networking, which require better PCs, Mayur says.
The purchase horizon of six months would include the income-tax refund period, Mayur says. Some people already might be planning where to spend their refund, he says.
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Plus, parents might be planning ahead to buy PCs for children, such as for graduation gifts or for students going away to college.
But analysts with market researchers International Data Corp. and NPD Techworld say the IBD poll results don't agree with what they've seen recently. They believe consumers have grown more cautious about PC purchases because of concerns about the economy and a possible war with Iraq.
In February, the IBD/TIPP Economic Optimism Index fell to its lowest mark in 25 months. Other measures of consumer sentiment have fallen to near-decade lows as Americans grew more worried about the effects of the U.S.-Iraq standoff on jobs and oil prices.
Consumer PC sales tend to follow the consumer sentiment fairly closely, says IDC analyst Roger Kay. A looming war generally dampens demand, he says. Once a military conflict is perceived to be over, however, there's a euphoria that helps sales, he says.
The problem with intent-to-buy figures is they don't directly translate to sales, says NPD analyst Steve Baker.
Any Follow-Through
People might intend to buy a PC, but following through can take longer than they expect, he says.
"I've been intending to buy a new computer for the last 15 months, but I haven't done it yet," Baker said.
Still, a growing intent to buy is a good sign, Mayur says. "The escalation in the intent portends pretty well for buying behavior," he said.
U.S. retail sales of desktop PCs have fallen every month since January 2001 on a year-over-year basis, NPD says. Notebook PC sales have been mostly up, but they account for only about 30% of all PC retail sales.
Among likely PC buyers, 53% say they plan to purchase their new computer in a store, says the IBD/TIPP poll. That percentage has been declining gradually.
Meanwhile, 28% of likely buyers say they'd prefer to get their new computer online. That's the highest level since the PC poll started, which bodes well for direct seller Dell Computer Corp. (DELL)
Still, since most PC buyers prefer to get their PCs from a retailer, Dell is expanding its use of sales kiosks in malls. These locations are staffed with Dell salespeople. The kiosks don't stock machines for sale. Instead, they let users test out Dell computers and configure made-to-order PCs on site.
Preferred Brands
Among likely PC buyers, 46% chose Dell as their preferred brand. That's the highest for any company since the IBD/TIPP poll began.
Dell's main rival, Hewlett-Packard (HPQ), slipped in consumer preference. It now ranks third with 10%, behind Gateway (GTW) with 11%.
Overall, PC unit sales to consumers and businesses rose about 4% last year in the U.S. IDC and Gartner Inc. say total U.S. PC shipments will rise about 8% this year as users start to replace PCs they bought in the late 1990s. The typical replacement cycle has been every three years.
Consumers may well lead the latest replacement cycle because their machines are older on average than business PCs, says IDC's Kay.
Plus, many are using Microsoft Corp.'s (MSFT) Windows 98 or earlier operating systems, which are more prone to crash. Microsoft has since adopted one PC operating system for both consumers and businesses, called Windows XP. It's proved to be stabler. |
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