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Office Solutions, Mar/Apr 2005

The incredible shrinking PC industry

With slower growth rates and reduced profit margins, the PC industiy will face vendor consolidation with three of the top 10 PC manufacturers exiting the market by 2007, predicts the Stamford, Connecticut-based market research firm Gartner Inc. Although the market has registered double-digit shipment growth the past fewyears, Gartner sees tougher times ahead.

PC unit growth is forecast to average 5.7 percent annually from 2006 through 2008, half the 11.3 percent average of 2008 through 2005. PC revenue growth will average 2 percent annually from 2006 through 2008, less than half the 4.7 percent average of 2003 through 2005. Emerging markets will account for more than 60 percent of PG market growth from 2006 through 2008.

"With PC replacements still in full swing, 2005 should be a reasonably strongyear for PC vendors," says Leslie Fiering, research vice president for Gartner's Client Platforms group. "However, the end of the replacement cycle is likely to strain viability for even the largest PC vendors in 2006 and beyond."

Currently, the top-10 worldwide PC vendors, by unit shipment, are Dell, HP, IBM, Fujitsu/Fujitsu Siemens, Toshiba, Acer, NEC, Legend, Gateway, and Apple Computer. Of the top-10 worldwide vendors, only Dell has consistently been profitable in the past several years. According to Gartner, the PC divisions of HP and IBM are vulnerable to being spun off if their drag on margins and profitability are deemed too great by their parent companies.

Gartner was right about IBM, and shortly after making these predictions, IBM's Personal Computing Division was acquired by Lenovo Group Limited, the leading PC brand in China and across Asia. The acquisition creates the world's third-largest PC business, bringing IBM's enterprise-class PC technologies to the consumer market and giving Lenovo global market reach beyond China and Asia.

The latest projections for the IT industry are available in a series of Gartner "Predicts 2005" reports. Gartner's extensive "Predicts" research project spanned more than two dozen technology and vertical industry focus areas. More than 140 analysts proposed and collaborated on approximately 150 predictions that will affect IT users, vendors, and most industries in 3005 and beyond. A description of these predictions is available in the Gartner Research Note "Predicts 2005: Deploy New Technology, Applications for Success." This document is available on Gartner's Website www.gartner.com.

Business travel on the rise along with prices

An American Express (Amex) Global Business Travel Forecast for 2005 sees a continued revival of the business travel industiy accompanied by rising. travel costs. The forecast finds that within the United States, typical business air fares are expected to rise by 1 to 3 percent, and international business-class fares should rise by 2, to 5 percent. According to Amex, low-cost airlines are the primary reason U.S. domestic fares are only expected to experience a modest increase.

Checking in on hotel rates, Amex says to expect increases up to 3 percent in the United States in 2005, continuing an 18-month trend where domestic hotel rates rose by 7 percent year-over-year by the end of June.

Environmental issues-a workplace priority

The most recent Steelcase Workplace Index Survey conducted by Opinion Research Corp. (ORC) reveals that issues surrounding environmental sustainability are important to workers and companies alike. However, the study also reveals that the incentive motivating companies into action is also the barrier that keeps them from doing so.

According to the survey, more than half of those surveyed believe environmental and sustainability issues are a "high priority" for their company. And, approximately 74 percent of Americans say their company "always" or "often" takes steps to improve its environmental standards, such as using less paper, recycling, and shutting off lights and other electrical devices when not in use.

Examining the incentives and barriers that encourage or discourage companies from taking action, the survey found that Americans believe cutting costs is the primary incentive encouraging their company to be more environmentally responsible. In contrast, the survey reveals that the majority of Americans believe cost is the primary barrier keeping companies from minimizing their impact on the environment.

Additionally, the survey examined the importance of environmentally friendly products and furniture in offices. Among the findings:

* 54, percent of Americans say their company purchases recyclable or sustainable products and furniture.

* 77 percent of respondents under the age of 55 say they would prefer that their employer purchase environmental products instead of other products; whereas, only 50 percent of respondents over the age of 55 say they would prefer that their employer purchase environmental products.

* 61 percent of Americans say they're more likely to buy an environmentally friendly product even if it cost more than another product.