Abstract

The global desktop PC market is expected to score growth in the second half of 2006, due to the following factors:

First, outlook for the global economy in the second half is good, especially for emerging-market economies which have relatively high demand for desktop PCs. With the back-to-school demand in the third quarter, international brand-name vendors and local channel players in the European and US markets began to increase orders with their production partners in the first half of July.

Second, in order to make up for worse-than-expected shipment in the first half, major brands will implement new marketing strategies and price cuts. Dell, for instance, has embraced a new marketing method for the SMB (Small and Medium Businesses) and residential consumer markets, such as substitution of discounts for mail delivery by direct price cuts. In addition to continuous efforts to tap the Chinese and North American markets, Acer will also resort to an aggressive pricing strategy to win market share.

Third, rollout of new CPUs, chipsets, and operating systems will considerably boost new and replacement demand. Meanwhile, deferred demand in expectation of new products in the second quarter will become evident in the third quarter following the launch of new products, further boosting market growth in the second half.

However, high oil prices and interest-rate policies aimed at reducing inflation might dampen consumer demand. In addition, a number of other consumer electronic products, including Sony's PlayStation 3 and Nintendo's Wii, are also scheduled to hit the market in the second half, and Microsoft is expected to cut the price of its Xbox 360. These factors could affect consumers' disposable income and subsequently their demand for desktop PCs.