PC sales may be worse than expected this year

Earlier in the day, Intel, the key chipmaker for the PC business, said its first quarter revenue would be around US$12.8 billion, down from the about $13.7 billion it had earlier expected, citing weaker than anticipated demand for business desktop PCs and lower than expected inventory levels in the PC supply chain.

About 293 million PCs are expected to be shipped this year, according to IDC. The PC market dropped in value by 0.8 percent to $201 billion in 2014, and is expected to drop by another 6.9 percent in 2015, IDC said. Smaller declines in subsequent years are expected to take the total market to $175 billion by 2019.

The research firm cut its forecast as it expects the stronger U.S. dollar will make computers more expensive in many countries. Microsoft is also expected to roll back subsidies it was offering manufacturers of Windows computers with its Bing as the default search engine.

A pickup in consumer interest is, however, expected later in the year as products roll out based on Microsoft's new Windows 10 operating system and Intel's Skylake chip architecture.

Intel blamed the weakening of the PC market on a slower than expected purchase of newer PCs by small and medium businesses holding on to computers running the earlier Windows XP operating system from Microsoft. It also cited challenging macroeconomic and currency conditions, particularly in Europe.

The PC business was earlier largely expected to be cannibalized by tablets, but it turns out that these devices are also facing a rough patch, in part because of larger-screen phones, popularly known as phablets. Worldwide shipments of tablets are expected to reach 234.5 million units in 2015, a small year-over-year growth of 2.1 percent from last year, IDC said Thursday.

"Fortunately for PC makers, tablet growth has slowed," said Jay Chou, an analyst at IDC in a statement. The PC ecosystem is already benefiting from efforts by PC makers to offer products that narrow the gap in price and user experience gap with mobile devices, he added. That said, devices like phones, tablets, and wearables continue to pose a challenge to PCs, IDC said.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com