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PC Market Slump to Continue in 2013

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The U.S.-based information technology (IT) research firm International Data Corporation (‘IDC’) forecasts yet another year of expected decline in the PC market. After witnessing a tough 2012, IDC predicts year-over-year shipment decline of 1.3% in 2013, as against the previous expectation of 2.8% growth. But the projected decline is somewhat better than a decline of 3.7% registered in 2012.

The year 2012 was a difficult one for the PC industry mostly due to the growing popularity of tablets, slow adoption of Microsoft Corp.’s (MSFT) Windows 8 and ongoing macro uncertainties, reflected by a soft holiday season and a tough IT spending environment. IDC also noticed a declining trend in the emerging markets as their transformation into matured markets is limiting growth.

In 2012, Hewlett-Packard Co. (HPQ) occupied the leading position with respect to shipments and market share. H-P was followed by Lenovo and Dell Inc. (DELL).

IDC expects most of the factors pulling down the PC market to persist in 2013 but expects better statistics from the emerging markets. Moreover, the research firm forecasts a better second half of 2013 buoyed by potential wide acceptance of Win 8 and a likely PC refresh cycle.

The declining PC market has forced Hewlett-Packard and Dell to diversify. Recently, H-P introduced a host of new offerings including a new BPO (business process outsourcing) solution, three desktop printers and two media players. H-P is also trying its luck with Slate 7, a tablet running on Google Inc.’s (GOOG) Android platform.

Both H-P and Dell are also craving for a wider exposure in the high-margin server, storage, networking and cloud computing markets. For this purpose, the companies have acquired a number of cloud-based software and hardware companies.

Currently, H-P has a Zacks Rank #2 (Buy) mainly due to its new offerings, its decision to divest WebOS and re-launch its tablet. On the other hand, Dell, which has filed for a leveraged buyout, has a Zacks Rank #3 (Hold).

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