Although localized disturbances like the 1999 Taiwan earthquake or an Intel chipset glitch can send ripples down the supply chain, PC sales are generally guided by macroeconomic trends. In the third quarter of last year, the U.S. GDP grew by a whopping 8.2 percent, and 4 percent in the fourth quarter. The Institute for International Economics, a private nonprofit based in Washington, said in April that it predicts U.S. real GDP growth for 2004 to be between 4.0 percent and 4.5 percent.For his part, Federal Reserve Chairman Alan Greenspan testified to a U.S. House of Representatives budget subcommittee in February that "the most recent indicators suggest that the economy is off to a strong start in 2004, and prospects for sustaining the expansion in the period ahead are good." "Most of the indicators are still up; demand seems to be there," IDCs Kay said. "In the supply chain theres too much inventory in some cases, and not enough in others, and then theres some mix problems. That generally says inventories are low, so that implies demand is still pretty good. The assumption here is that the economy is the most important driver within the PC market, and that the PC market is concurrent with the general economy." PC makers have not reported their second-quarter earnings yet, although the two main PC microprocessor suppliers have. "What we see are modest signals from the IT community that they are going to increase spending, but they remain extremely focused on the value question," said Hector Ruiz, president and CEO of Advanced Micro Devices Inc., in a conference call with analysts this month. Intel Corp. executives said they expect about an 11 percent jump in revenue heading into the third quarter, although they didnt address the IT spending issue directly. Find out how Intel and AMD performed in their most recent quarters. Some analysts have begun regarding notebook PCs and desktops as two sides of the same coin, as corporations have begun phasing back on desktop purchases in favor of devices their workers can take on the road. Notebook PC growth could reach into the 20 percent range, although a more reasonable expectation would be about 14 percent, Gartners Shiffler said. Next Page: Servers march to different beats.
Retail sales were down in June, but that month marked the fourth consecutive month of strong consumer confidence, Shiffler said, who characterized it as a "mixed bag" of economic data, including the continued weakness of the dollar against the euro and other currencies.