In the fourth quarter of 2008, the worldwide personal computer industry suffered its worst growth rate since 2002 as worldwide shipments totaled 78.1 million units, a 1.1 percent increase from the fourth quarter of 2007, according to preliminary results by Gartner.

“The United States experienced steeper than expected shipment declines due to the recession. The Europe, Middle East and Africa (EMEA) region was also affected by the economic slow down across key countries,” said Mika Kitagawa, principal analyst for Gartner's Client Computing Markets group. “Asia/Pacific recorded the worst shipment growth since Gartner started its personal computer statistics research. Latin America met expectations, but its growth was much lower than in the past.”

The growth driver for the 2008 holiday PC season was the mini-notebook segment. With more vendors offering creative sales promotions, the mini-notebook segment outpaced overall mobile personal computer growth. However, personal computer revenue experienced a record decline. Steep average selling price (ASP) declines, as well as robust growth of low-priced systems, including mini-notebooks, contributed to this drop.

Hewlett-Packard managed to grow above the worldwide average in the fourth quarter of 2008; however, its year-on-year growth was its lowest since its merger with Compaq in 2003. HP did well in EMEA (Europe, the Middle East and Africa) by aggressively promoting the mini-notebook segment, but it was impacted by sales in the U.S. market.

In the U.S., the personal computer market in the fourth quarter of 2008 had its worst shipment decline since the last U.S. recession in 2001. Personal computer shipments in the U.S. declined 10 percent in the fourth quarter of 2008.

“The fourth quarter started out with a relatively optimistic view, but then it got worse every month,” Kitagawa says. “In the fourth quarter, U.S. businesses quickly cut IT spending with public sectors, including some government and education buyers, postponed PC procurement due to budget crisis concerns. Personal computer vendors focused on the professional market were especially hit by the weakening market conditions. Overall, consumer mobile personal computer shipments showed strength, but the shipment growth was boosted by steep ASP declines which were further accelerated by the popularity of mini-notebooks.”

Dell maintained the No. 1 position in the U.S. personal computer market in the fourth quarter of 2008, but its shipments declined 16.4 percent from the fourth quarter of 2007. Dell was impacted by a very weak professional market.

Apple doesn't rank in the top five globally, but it's in fourth place in the US. According to Gartner, in the fourth quarter of 2008, Apple sold 1,255 million Macs for eight percent market share. That compares to 1,159.3 million Macs and 5.2 percent market share in the fourth quarter of 2007.

Meanwhile, according to the IDC Research Group, despite market optimism early in the fourth quarter, the pace at which the economic environment unraveled and the extent to which personal computer purchases were affected was faster than anticipated.

Following roughly six years of growth, with the last five averaging 15 percent increases, worldwide PC shipments were down 0.4 percent year on year in the fourth quarter of 2008 (4Q08), according to IDC's Worldwide Quarterly PC Tracker. The dramatic slowdown was enough for a sequential decline of 2.5 percent from the third quarter in place of an expected increase for the holiday season.

The weakening economic environment, including falling home and stock values, deteriorating credit, and implications for trade and consumer spending, was clearly the dominant factor limiting growth. Low-cost portables, vendor competition, and holiday promotions were simply not enough to overcome the economic tide, even with the market for mini notebooks (also known as netbooks) taking off.

Growth of portable personal computers was cut roughly in half from nearly 40 percent year on year in the first three quarters of 2008 to roughly 20 percent in the fourth quarter. Meanwhile, the pressure on desktop personal computers pushed volume down roughly 16 percent from a year ago after only a small decline earlier in the year. Mini notebook volume is estimated at near five million units in the fourth quarter, bringing the total for 2008 to about 10 million, accounting for nearly seven percdent of total portables, with shipments expected to double in 2009.

Despite the dramatic slowdown in fourth quarter shipments, annual volume was up 10.5 percent in 2008. This was on par with 2006, when some vendors struggled with the accelerating transition to portables and replacement rates dropped with economic uncertainty and the pending launch of Vista.

“For all that’s been said about this recession being different than 2001, the drop in personal computer growth from mid-teens the preceding year to near flat growth in the most recent quarter shows that the impact of this crisis looks similar to the last time around,” says Loren Loverde, program director for IDC’s Worldwide Quarterly PC Tracker. ”It is tempting to argue that international markets will be less affected, or that low prices and the transition to portables will limit the impact, but the market has taken a serious hit and the competitive environment along with a race to low-cost portables could easily undermine profits from mobile computing. I won’t be surprised if recovery gets pushed further into 2010 as this crisis unfolds.”

“As expected, demand for PCs in the U.S. faced a challenging environment, with a substantial reduction in spending among both consumer and commercial segments amid tightening credit, eroding confidence, and growing unemployment. Not only unit growth was constrained, but the value of the market also shrank as a result of competitive pricing and the introduction of lower-priced mini notebooks,” says Doug Bell, research analyst, United States Quarterly PC Tracker. “Unfortunately, the first half of 2009 looks pretty shaky as the economic fundamentals need to recover before spending on PCs will resume.”

While the United States came in below expectations, the change in growth from the first three quarters was not as dramatic as in other regions. This reflects relatively slow growth early in the year and the unexpected speed with which the financial crisis spread to other regions. Tighter budgets across segments were evident in a 16 percent decline in Dell volume, and a decline of three percent from HP. Nevertheless, the next three vendors (Acer, Apple, and Toshiba) all managed year-on-year gains with growth in portables.

According to IDC, Apple sold 1,245 million Macs and had 7.2 percent market share in Q4 2008. That compares to 1,159 million Macs and 6.4 percent market share in Q4 2007.