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The PC's days may be numbered

But it’s boom time for PDAs and MP3 players

As personal computer sales continue to slide, chip sales are soaring as more people want devices like mobile phones and MP3 players, according to two recent studies

Two studies released yesterday provide a divergent perspective on the future of the consumer high-tech market.

Despite an overall boom in global semiconductor sales last year – £136.26 billion in 2000, according to a Semiconductor Industry Association study – PC sales slid one percent last year, according to a study by market research firm PC Data.

Separately these studies may seem like a contradiction: chip sales are soaring while PC sales continue to spiral downward. But taken together, the data suggests the PC's days may be numbered.

The growth in chip sales highlights a burgeoning demand for task-specific devices, including mobile phones, MP3 players and personal digital assistants, even while the growth is being offset by the recent downturn in PC sales from manufacturers such as Intel.

Demand for internet-infrastructure hardware also helped boost sales last year, according to the study.
In December alone, traditionally the strongest sales season for PCs and most other retail items, computer sales plunged 24 percent, marking the fifth consecutive month of decline.

"A spike occurred during the week before Christmas, but it fell short of the boost needed to lift overall sales during the holiday shopping season," Stephen Baker, PC Data VP of technology products research and analysis, said in a statement.

"The sales decline was the convergence of a number of factors, including a slowing economic outlook, slightly higher prices in 2000 and the lack of a compelling upgrade rationale for the millions of consumers who purchased PCs over the last two years."

Meanwhile, semiconductor sales worldwide enjoyed a successful year, with a growth of 37.1 percent reaching a new high of £136.26 billion last year. In November alone, sales soared 28.4 percent, reaching £12.15 billion, compared to £9.47 billion a year ago.

Responding accordingly, Lehman Brothers analyst Daniel Niles downgraded Intel and Dell stocks, citing lack of demand. Niles' 12 month target price for Intel stock was slashed from £36.56 to £26.59 and the earnings outlook dropped from 93p to 86p a share.

In response to the slowdown, manufacturers have sought to broaden their product offerings. This week Intel announced it plans to release a digital-music player, while PC manufacturer Compaq is already marketing its own digital-music playing device, as well as the Ipaq, its hot-selling line of personal digital assistants.


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