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Consolidation in the PC market

IBM’s selling their PC business to Lenovo, reports The New York Times today. This comes after research firm Gartner issued a press release on Monday predicting that 3 of the top 10 PC Manufacturers will be out of (the) business by 2007. And they pointed to IBM as a potential player.

I have to say I’m significantly less impressed by their display of foresight given the fact that IBM no doubt mentioned this to them. But who knows? Maybe the Gartner statement cleared the way before IBM’s announcement.

Regardless, Gartner is already 33% correct - wonder what that does to their probabilities. We only need two manufacturers to shut down operations now for Gartner’s prediction to come to pass, and we have 2 full years.

Who’s likely to be next? No shocking insight from Gartner. Analyst Leslie Fiering only shared specuation on two of the three. “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.” Big deal. We knew about HP already. Carly in her WSJ interview this week commented that any non-performing business is subject to divestiture, and IBM has already leaked.

So what, Gartner. I want to hear your predictions for who this third player is.

Adding to the connumdrum are conflicting reports as to the continued growth of the PC business over the next year and beyond. Gartner sees strong sales to continue throughout 2005. However, InformationWeek has a report with a roundup of other numbers, with the bearish title New Orders For Computers Fall; Dip In Buying Seen In ‘05:

After several months of gains, new orders for computers fell 16.1% in October, the Census Bureau reported Thursday. The government preliminarily pegged the value of those orders in October at a seasonally adjusted $5.67 billion. Still, new orders for computers in October rose 13.7% year over year.

Looking at all manufacturing industries, factory orders rose a seasonally adjusted .5% in October. That metric had been flat in September. For the year, new orders for all manufactured goods rose 11.1%.

Earlier this week, a report issued by the research firm IDC said market demand for IT products and services will dip over the next 12 months. Its Buyer Intent index slipped to 1,088 from 1,091. However, IDC says, the index is about 5% higher than it was in January.

None of us knows the future - it might be safest to make predictions that include sure bets, as Gartner did earlier this week.