Why Are Computer Sales Slumping?

N E W   Y O R K, Aug. 9 -- The personal computer has become a staple of modern life. But is the era of the PC losing momentum?

The PC has changed the way we work, communicate and spend our time. It has helped the economy boom, made Bill Gates the world's richest man, spawned a new class of entrepreneurs and helped people create millions of Web pages. And the PC has been the subject of countless accolades, from Time Magazine's Man of the Year award in 1982 to the more recent utopian musings of technology gurus.

But as we approach Sunday's 20th anniversary of IBM's first PC — the forerunner of the machines that now dominate the market — sales are declining, almost for the first time since computers became mass consumer goods.

It's not just that the once-explosive industry's growth has slowed; rather, fewer people bought PCs in the first half of 2001 than they did in the last half of 2000. That has industry observers trying to determine if the slump is just a temporary aberration due to the sluggish economy, or a harbinger of something more serious.

2001 Will Remain a Struggle

According to research firm Gartner Dataquest, PC sales suffered a year-to-year decline of 1.9 percent in the second quarter, on top of a first-quarter decline. That marks the first time since 1986 that sales have gotten worse, and industry observers are not expecting things to improve during the rest of 2001.

"Compared to last year, things will be lousy," says Steve Baker, an analyst with research firm NPD Intelect Market Tracking in Reston, Va.

Charles Smulders, a PC analyst at Gartner Dataquest in California, expects worldwide sales to remain flat compared to 2000.

"There is an underlying weakness in the market caused by saturation," Smulders says. "Everybody who needs a PC pretty much has one. That means we won't see the sustained levels of growth that we've had in the past 15 or 20 years."

What Will Spur Sales?

Indeed, analysts frequently say they feel the PC market in the United States has become "mature" — that is, the market has reached the point where explosive growth ends and relatively few households will be buying a PC for the first time.