Windows 7: Positive impact to PC shipment in Q4

Several PC-ODM makers have released earning results for 1H’09 and most of them reveal a positive guidance toward 2H’09. According to DRAMeXchange, PC shipment is expected to have 20.6% growth in terms of quarterly basis. Despite of noise from components shortage in 2Q’09, the actual demand still outperforms what we expected. At the meantime, PC-OEMs are trying to increase the order volumes that notebook and netbook are broadly covered. It is expected that many PC-OEMs will have a satisfactory sales performance in quarter end of 3Q’09 and 4Q’09. Currently it’s the timing for model transitions that new PC models are ready to launch that we see diversified products such as CULV and AIO will come out at 2H’09 and consumers are more welcome and have more incentives to purchase.

Coming out in October, Windows 7 will be lunched that PC-ODM makers has initiated installing RTM version to machines in August that consumers are able to purchase brand new machines with Windows 7 in coming 4Q’09. Windows 7 is expected to have satisfactory trail run and shows a better performance than Vista. According to DRAMeXchange, retail channels are requiring more inventory build up for new machines and we expect Windows 7 will bring positive impact toward PC shipment while consumer models will be benefited first since consumer market will have better outlook than commercial market. The replacement effect will happen more clearly in coming 2Q10. However, we still see some good signs about recovering European& American market demand along with steadily stable economy for 2H’09. 4Q’09 hot season can be optimistically anticipated if September PC shipment can meet the expectation.

Impact by global financial crisis, PC shipment suffers from the depression under floppy economic circumstance with declining purchase power that consumer market has disappointed the market. On the other side, commercial market has also suffered from the frozen corporate IT spending that shipment has shrunk as well. Started from 2Q’09, not only inventory replenishment from channel request but also the recovering demand has been triggered by low price PC and netbook that customers have more incentive to purchase new machines. PC-OEMs also launch series of new products such as CULV notebook and AIO to keep accelerating the demand. Nevertheless, according to DRAMeXchange, overall 2009 PC shipment will still decline 0.9% in terms of yearly basis given the poor commercial PC performance.

Combined with rebounding global economy, improving European and U.S. market demand, and steadily growing Asian&China markets, we believe that PC shipment growth will return to the momentum with mildly degree along with the recovering consumer purchase power. Corporate demand is expected to have a moderate come back with gradually stable corporate profit in 2010. According to DRAMeXchange, 2010 PC shipment growth will rise 9.2% to around 300 million units. Desktop shipment will rise merely 2.3% to around 130 million units given the turnaround consumer preference from desktop to notebooks. Notebook sector will play an important role in PC shipment growth since most PC-OEMs continuously launch new models along with aggressive pricing strategy and traditional notebook will be back to primary products for market promotion. Overall 2010 traditional notebook scale will be up to around 140 million units with 11.4% YoY growth rate. As for netbook, according to DRAMeXchange, will reach to 35 million units with healthy 31% YoY growth rate since this market has been over crowded with too many products and competition is too fierce. We see PC-OEMs would rather put more emphasis on traditional notebook instead of netbook since strong netbook growth will not bring positive impact on profit maintenance.