Despite a spattering of optimistic sales reports, chip makers aren't out of the woods just yet. According to market research firm Gartner, worldwide chip revenues are on pace to post a 11.4 percent decline in 2009, which would mark the first time the semiconductor industry has ever seen a decline in two consecutive years, and the just the sixth time posting a decline in the last 25 years.
The struggles in the memory sector have been well documented this past year, but surprisingly, memory revenues declined significantly less than the entire semiconductor industry, Gartner says. What's more, Gartner is predicting a recovery for memory makers, largely a result of memory vendors slashing capital spending in the previous years and supply constraints pushing up prices.
Not all memory makers can look forward to 2010, however, According to Gartner, neither the recession or its recovery were felt equally by all semiconductor vendors. Qimonda, for example, was forced into bankruptcy and some of the weaker Taiwan-based players have had a tough go, which allowed most of the major vendors to pick up market share and, in some cases, report revenue growth.
Nevertheless, Gartner says 2009 goes on the record as one of the worst years for the semiconductor industry since the burst of the dot-com bubble in 2001.
Compared to 2008, the worldwide server market has certainly had its struggles this year. According to data released by market research firm Gartner, global server shipments tanked 17.1 percent over the same quarter one year ago, while revenues for the same period dropped 15.5 percent. But it's all about how you look at the numbers, Gartner points out.
"It is important to put the yearly declines into perspective," said Jeffrey Hewitt, research vice president at Gartner. "Looking at the third quarter results from the sequential perspective, they showed an increase of 13.8 percent in shipments and 10.2 percent in revenues when compared to the second quarter of this year. That suggests that the market as a whole is showing signs of stabilization as we move toward the end of 2009."
It terms of revenue, IBM lead all others in the worldwide server market for the quarter, claiming $3.38 billion. HP wasn't far behind with $3.2 billion in 3Q revenue, and then it drops off with Dell taking the third spot with $1.42 billion in revenue.
On the server shipment front, HP pumped out more servers in the third quarter than anyone else and now holds 32.1 percent of the market share. Dell came in second with a 22.8 percent share, and IBM a distant third with 12.8 percent.
One of the hottest trends in electronics right now is digital readers, but no matter how many companies jump on the bandwagon -- and several of them have -- prices will have to come down before the public embraces them, according to Gartner.
"At the moment it appears that $199 will be the lowest price for fully featured e-reading devices for the 2009 shopping season, but prices will need to drop closer to $99 to gain significant traction," Gartner noted.
At the same time, Gartner predicts e-reader "mania" in 2010, though getting to that point won't be without a few hurdles. The market research firm says a wider variety of retail channels is needed, and more publishers need to be seen buying into e-readers.
"It's the perfect time for a trial and to establish relationships with others in the value-chain -- that is service providers and digital warehouses -- that can be positioned to assist in a rapid deployment if the market takes off earlier than anticipated," Gartner added.
According to market research firm Gartner, worldwide software as a service (SaaS) revenue is on pace to reach $7.5 billion in 2009. That's a big turnaround from 2008 -- 17.7 percent, to be exact -- when revenue fell flat at $6.4 billion.
"The adoption of SaaS continues to grow and evolve within the enterprise application markets," said Sharon Mertz, research director at Gartner. "The composition of the worldwide SaaS landscape is evolving as vendors continue to extend regionally, increase penetration within existing accounts and ‘greenfield’ opportunities, and offer more-vertical-specific solutions as part of their service portfolio or through partners."
But that's not the only good news. Gartner says the market will show consistent growth at least through 2013, by which time SaaS revenue is expected to exceed $14 billion in the enterprise sector.
Google's open source Android platform will turn one year old later this month, and according to Gartner, the OS is about to hit a major growth spurt. While Android can be found on less than 2 percent of all smartphones today, Gartner predicts a seven-fold increase in global Android-based handsets by 2012.
That would put Android in second place, trailing only the Symbian OS, which today accounts for nearly half of all smartphones but is expected to drop to 39 percent in 2010, Gartner says.
Gartner acknowledges that T-Mobile's G1 -- the first Android-based smartphone -- was met with a mixed response among consumers, but the research firm believes Google's continued backing of Android and its focus on cloud computing capabilities will propel the platform to 14 percent of the smartphone market in just a couple of years.
"Google's other up-and-coming consumer and enterprise products should make [Android] a dominant platform," Ken Dulaney, VP of Gartner Research, told ComputerWorld in an interview.
Dulaney also predicts that there could be as many as 40 models of Android devices shipping in 2010.
According to Gartner, Inc., a business technology research company, cell phone sales totaled 286.1 million units during the second quarter of this year – a 6.1 percent decrease over the second quarter of last year. But, smart phone sales picked up considerable steam surpassing 40 million units in sales, a 27 percent increase from the second quarter of last year.
“Despite the challenging market, some devices sold well as consumers who would usually have purchased standard midrange devices either cut back to less expensive handsets or moved up the range to get more features for their money,” stated Carolina Milanesi, a research director at Gartner. “Touchscreen and qwerty devices remained a major driver for replacement sales and benefited manufacturers with strong, touch-focused midtier devices. However, the decline in average selling price (ASP) accelerated in the first half of the year and particularly affected manufacturers that focus on midtier and low-end devices, where margins are already slim.”
A great deal of this is credited to Apple’s expansion to a larger number of countries, which has had a clear effect on volume. Still though, companies like Nokia with their N97 and Research In Motion (RIM) with their popular BlackBerry line continued to dominate the number one and two positions respectively.
Even Gartner’s numbers confirmed that the PC market didn’t decline as sharply as was expected. Gartner had feared a very steep decline of 9.8%, but its crystal ball eventually turned out to be way off the mark. According to Gartner, PC shipments declined by 5%.
IDC expects the PC market to put its horror run behind by the end of 2009. "New product launches in the second half of the year combined with seasonal growth and greater economic confidence resulting from factors such as government stimulus, a more liquid housing market, relatively stable stock market and interest rates, and progress in the auto and financial industries, should support the expected return to growth by year-end,” said Loren Loverde, the program director for IDC's PC tracking unit.
Just a few days ago, iSuppli said worldwide PC shipments had declined in Q1 by the "largest historic rate" since the firm has been tracking the market. But after a rocky start, the PC market could be headed for a rebound by the end of the year, says market research analyst firm Gartner.
According to Gartner, the market is on pace to ship 274 million PCs worldwide by the end of 2009. That's still a 6 percent drop compared to last year's shipments of 292 million, but better than Gartner expected, who previously predicted a 9.2 percent decline.
Going forward, Gartner says shipments will pull an about-face in 2010 and predicts a 10.3 percent growth rate. However, the firm also warned that Windows 7, available today in pre-order form at a reduced rate, isn't likely to prove a game changer for PC sales.
"Unless Microsoft mounts a major marketing campaign in support of Windows 7, we think consumers will simply adopt the new operating system as they would normally buy new PCs and/or replace old ones," Gartner Research Director George Shiffler said in a statement.
If you thought things were already ugly for the PC market, brace yourself for it to get even worse in the coming months, says Gartner. According to the analyst firm, the PC supply chain will have "bottomed out" this quarter and then remain at a low level for several more quarters. Gartner says a sustainable recovery isn't expected until Q3 2010, but warns against getting too excited.
"We caution against interpreting such surges as signs of recovery, as full recovery is unlikely until demand in mature markets picks up," Gartner said in a note.
By the end of the year, the firm predicts PC sales will have fallen 11.9 percent to 257 million computers, marking the biggest fall ever. Desktop sales are expected to drop a whopping 32 percent from last year, with laptops on the rise by 9 percent.
Gartner also said that although PC vendors will see a boost in the third quarter as they prepare for back-to-school and holiday seasons, they could still be in for a "disastrous fourth quarter' if they over estimate the demand in mature markets.
Anyone else feel as though someone must have taken a tinkle in Gartner's Wheaties?
At the moment it is difficult to write about major financial developments in any industry without going on a frenzied hunt for words that can adequately describe the prevalent gloom. However, facts have a tongue of their own and at times don’t need to be underpinned by forceful words. Talking of facts, the previous quarter was the worst in the past six years in terms of PC sales.
PC sales data for the last quarter released by two of the leading market research firms, IDC and Gartner, paints a very grim picture. PC sales defied all expectations during the recently concluded holiday season and registered a trough. According to Gartner, PC sales only grew by 1.1 percent in the fourth quarter. But if data released by IDC is to be believed, then there was a depreciation of 0.4 percent.
Microsoft had predicted a growth of 10 percent to12 percent during the fourth quarter. The sharp drop in PC sales might have a huge impact on Microsoft’s own quarterly results.