According to the research outfit’s survey of iPad owners, just 14 percent purchased the device instead of a notebook or netbook during the first six months of its availability, a percentage that has since fallen to about 12 percent. And neither is great enough to have had much effect on PC sales. In fact, today cannibalization of netbooks is actually down 50 percent among recent iPad buyers, when compared to early adopters.

So if there’s a slowdown in consumer PC sales, who’s the real culprit?

Microsoft.

“The conventional wisdom that says tablet sales are eating into low-priced notebooks is most assuredly incorrect,” says Stephen Baker, vice president of industry analysis at NPD. “The explosion of computer sales when Windows 7 launched, as well as the huge increase in netbook sales at that time, are much more to blame for weak consumer PC sales growth than the iPad.”

PREVIOUSLY:

• Tablet Cannibalization on the Rise in 2011
• Forecast: 19 Million Notebooks Lost to Tablet Cannibalization (Meaning iPad) in 2011
• IPad: Tonight We Feast on Laptop Flesh!
• Apple: The iPad Isn’t Cannibalizing the Mac, But We Sure Hope It’s Cannibalizing the PC
• IPad No Cannibal, Says Analyst
• Apple’s iPad: Angel or Cannibal?

In a repeat of a trend seen last quarter, both firms report that the market shrank in the first quarter of the year. This would constitute the first market contraction in six quarters, and the first since the onset of the recession. They differ, however, on the size of that contraction: IDC pegs it at 3.2 percent since the first quarter of 2010; Gartner at 1.1 percent.

To be fair, let’s remember that the first quarter of the year is always seasonably slow for PC purchases because two things tend to happen in the fourth quarter: Consumers splurge on gifts for family and frankly for themselves too, and take advantage of crazy deals offered by retailers desperate to clear out their inventory. On the business side, some CIOs take the opportunity to use up unspent funds in their budgets, and get employees starting off the new year with a fresh new machine at their desks. However, this tendency is just as often offset by the start of a new budget year. Whichever way you slice it, the first quarter is always weak on consumer sales though a bit stronger on the enterprise side.

So what happened? The iPad 2, for one thing. “With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs,” is how Mikako Kitagawa, principal analyst at Gartner, put it. “We’re investigating whether this trend is likely to have a long-term effect on the PC market.” Ya think?

Bob O’Donnell, IDC’s vice president for Clients and Displays, wasn’t quite as willing to blame the iPad: “Slower than expected commercial growth in the first quarter failed to offset the ongoing challenges in the consumer market,” he said in a statement. “While it’s tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles.”

Jay Chou, another IDC analyst put it much more succinctly: “‘Good-enough computing’ has become a firm reality.”

The picture gets no better when you look at regional results. IDC says shipments declined in the U.S. by 10 percent. Gartner pegged it at 6 percent. It was, Gartner noted, the third consecutive quarter for year-on-year declines in U.S. notebook sales. Shipments in Europe contracted too, and Japan, which was already expected to be a weak market this quarter, has other things on its mind since the devastating earthquake and tsunami. Asia was the only bright spot, where shipments increased by 5.6 percent in IDC’s forecast and 4.1 percent in Gartner’s. China, IDC noted, failed to reach double-digit growth, and consumers in India, Gartner says, were distracted by the Cricket World Cup. Okay, then.

So how do the numbers look? Since IDC’s forecast is the most dire, I’ll start there:

The worldwide demand for PCs was 80.6 million units. Hewlett-Packard sold 15.2 million; Dell, which just made it back to second place, shipped 10.3 million; Acer 9 million; Lenovo 8.2 million; Toshiba 4.8 million; while “others” clocked 33 million. All vendors except for Lenovo saw declines. The worst decline was Acer’s, whose shipments fell nearly 16 percent. (Now we know why its CEO Gianfranco Lanci lost his job.) Lenovo, on the other hand, saw its shipments improve by more than 16 percent.

Demand in the U.S. was 16.1 million. HP led with 4.3 million, Dell 3.7 million, Toshiba 1.6 million, Apple 1.4 million and Acer 1.3 million. Unnamed others sold 3.7 million. Acer saw its shipments fall by an alarming 42 percent. Apple and Toshiba posted gains of 9.6 and 10.4 percent respectively. HP and Dell both saw declines.

Now let’s look at Gartner’s numbers (remember that each firm tracks the market a little differently):

Gartner pegged the worldwide market at 84.2 million units. It says HP sold 14.8 million, Acer 10.9 million, Dell 10 million, Lenovo 8.2 million, Toshiba 4.8 million. (Clearly there’s a difference in how they see Acer and Lenovo’s performances.)

In the U.S., Gartner estimated the market at 16.1 million units. By its reckoning, HP sold 4.2 million, Dell 3.6 million, Acer 1.8 million, Toshiba 1.7 million, Apple 1.5 million, others 3.3 million.

Posting first-quarter results after the markets close today, HP reported earnings per share of $1.36–well above the $1.29-per-share the Street had been expecting. But at $32.3 billion, revenue fell short of the consensus estimate of $32.96 billion.

Second quarter guidance fell short of estimates. The company says it expects revenue in the range of $31.4 billion to $31.6 billion and earnings between $1.19 a share and $1.21 a share. Analysts were looking for guidance of $1.25 a share on revenue of $32.62 billion.

The reason for the miss: softness in HP’s consumer and services businesses. Revenue in the company’s Personal Systems Division was down one percent from last year and services revenue declined two percent year over year.

That didn’t stop Apotheker from making an enthusiastic pronouncement or two in HP’s earnings release, though. “I’m pleased with our EPS and margin expansion during the quarter,” he said. “Going forward, we have the opportunity to further capitalize on our customers’ demands for higher value-added solutions…HP has a powerful portfolio, including exciting, recently announced cloud and connectivity offerings. We are focused on leveraging these strengths to extend our leadership and accelerate growth.”

Investors didn’t quite buy it. HP shares are down more than seven percent in late trading.

Intel said in its statement that PC Client Group revenue was flat. Other groups were stronger: Data Center Group revenue was up 35 percent, and Intel’s architecture group saw sales surge by 27 percent. Intel Atom microprocessor group, its low-power chip aimed at tablets and smartphones, saw revenue grow 8 percent. This despite word from Microsoft last week at the Consumer Electronics Show that it will develop a version of Windows for ARM-based chips from Texas Instruments, Qualcomm and Nvidia aimed at tablets and smartphones. Microsoft’s move calls into question Intel’s hopes to land design wins for the Atom low-power chip that it hopes to sell to manufacturers of smartphones and tablets, but which has yet to show any significant results.

This report of flat revenues for PCs comes a day after Gartner and IDC both said they saw weaker-than-expected sales of PCs in the fourth quarter of 2010.

For its 2011 first-quarter outlook, Intel said it expects revenue of $11.5 billion, plus or minus $400 million, and a gross margin of 64 percent, plus or minus a couple of points. For the full year, it expects gross margins to be 65 percent, plus or minus a few points. More after I go through the numbers and attend the conference call, which starts in about an hour.

Breaking shipments down by manufacturer (click chart to enlarge), Hewlett-Packard (HPQ) remained the market leader with a share of 18.1 percent–down from 19.7 percent a year earlier. Dell (DELL) claimed second place with 13.4 percent share (up 19.1 percent), followed by Acer with 12.7 percent (up 20.8 percent), Lenovo with 8.5 percent (up 47.3 percent), Toshiba with 5.2 percent (up 26.2 percent) and Asus with 3.5 percent (up 83.6 percent).

Impressive growth all around and another sign that the rebound in tech spending continues. “The PC vendors can pat themselves on the back a little bit,” IDC analyst Jay Chou told Bloomberg. “Given the uncertainty in Europe and fears of slowdown in places like China, we still did pretty well.”

And according to Gartner, PC sales rose 22.1 percent–the strongest quarter-over-quarter growth the market has experienced in the last seven years.

“These preliminary results indicate the recovery of the PC market on a global level,” said Mikako Kitagawa, principal analyst at Gartner (IT). “The U.S. and Asia/Pacific had already shown positive indicators last quarter, however the fourth quarter 2009 results were more concrete evidence of the recovery.”

Signs that the econalypse is coming to an end seem to have loosed the pent-up demand that’s been building over the past year, and most major PC manufacturers benefited–particularly Hewlett-Packard (HPQ), which, with either 20.7 percent (IDC) or 19.8 percent (Gartner) market share worldwide, remains the PC leader.

Also faring particularly well in Q4: Acer, whose strong netbook sales pushed it to second place behind HP, with market share of 13.4 percent according to IDC, and 13.5 percent according to Gartner.

And the rest of the industry’s big players? Dell (DELL) ranked third with a worldwide market share that fell to 12.5 percent from 13.6 percent a year ago, according to IDC, or to 11.5 percent from 13.3 percent, according to Gartner.

Lenovo and Toshiba ranked fourth and fifth, according to both firms, which put the former’s market share at around nine percent and the latter’s well above five percent.

Here are the summary tables; click to enlarge:

Nope. Turns out that 2009 PC shipments, which were once thought to be headed for certain disaster, aren’t going to decline at all. They’re going to grow.

By 2.8 percent.

Seems that rising consumer demand for netbooks is boosting unit sales to better-than-expected levels. That said, the market value of those sales is still projected to decline.

“Blame this year’s drop in market value on the unprecedented declines in PC average selling prices (ASPs) we’ve seen this year,” said Gartner (IT) research director George Shiffler. “The rapid decline in PC ASPs reflects a marked shift towards lower price points as customers have looked for ‘good enough’ PCs at the cheapest price, and vendors have tried to spur market growth by catering to ever-lower price points. We expect PC ASP declines to slow as the market recovers, but given the market’s competitive dynamic, we don’t see PC ASPs rising any time soon. As a result, growth in the market value of shipments will significantly lag shipment growth next year and beyond.”

One last point worth noting here. Despite Microsoft’s (MSFT) claims that sales of Windows 7 have been “fantastic,” Gartner says the operating system isn’t likely to have much impact on holiday PC sales. “We just don’t see consumers buying new PCs solely because of Windows 7,” said Shiffler. “We are expecting a modest bump in fourth-quarter consumer demand as vendors promote new Windows 7-based PCs, but the attraction will be the new PCs, not Windows 7.”

According to Shiffler, “The more critical question is, ‘When will businesses make their move to Windows 7, and what will they do about replacements in the interim?’ We don’t see businesses mainstreaming Windows 7 much before the end of 2010. We think many businesses will try to shift replacements to the back end of next year so as to sync their adoption of Windows 7 with their PC refresh. That will put a damper on early 2010 shipments.”

The global PC market will suffer a rare decline this year with shipments expected to slip four percent to 287.3 million units in 2009, from 299.2 million in 2008 (click on chart to enlarge). Not since the dot-com bust of 2001 have PC sales been so slow or their outlook so grim, says iSuppli, the research outfit charting the market’s collapse.

“An annual decline in unit shipments is highly unusual in the PC market,” says Matthew Wilkins, principal analyst, for iSuppli. “Even in weak years, PC unit shipments typically rise by single-digit percentages. The last decline–in 2001–was a 5.1 decrease in unit shipments due to the extraordinary impact of the Dot-Com bust, which caused inflated IT spending levels from the previous years to collapse.”

Driving the gloomy forecast this time around: The econalypse, of course, but also, dwindling demand for desktop computers. iSuppli expects an 18.1 percent drop in desktop shipments, from 151.9 million in 2008 to 124.4 million in 2009.

Grim, I know. Still, there is a bit of good news in the report. Notebook PC shipments will rise 11.7 percent to 155.97 million units in in 2009, exceeding desktop shipments for the first time ever.

“PC unit growth was stronger than we expected in all markets but Eastern Europe in the first quarter of 2009. In particular, consumer shipments were much stronger than we anticipated,” said Gartner’s George Shiffler. “However, professional shipments continued to struggle, and we think much of the growth in consumer units was due to vendors and the channel restocking inventories rather than an upsurge in demand.”

Well, hopefully that will all change after the October launch of Windows 7, right?

Nope. Not according to Gartner (IT), anyway. Unless Microsoft (MSFT) is planning another $300 million ad campaign featuring Jerry Seinfeld.

“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,” Shiffler said. “As for professional users, we still expect them to put off adopting the new OS for at least a year until they have fully tested their applications against it.”

“PC unit growth was stronger than we expected in all markets but Eastern Europe in the first quarter of 2009. In particular, consumer shipments were much stronger than we anticipated,” said Gartner’s George Shiffler. “However, professional shipments continued to struggle, and we think much of the growth in consumer units was due to vendors and the channel restocking inventories rather than an upsurge in demand.”

Well, hopefully that will all change after the October launch of Windows 7, right?

Nope. Not according to Gartner (IT), anyway. Unless Microsoft (MSFT) is planning another $300 million ad campaign featuring Jerry Seinfeld.

“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,” Shiffler said. “As for professional users, we still expect them to put off adopting the new OS for at least a year until they have fully tested their applications against it.”

“We are preparing for a [second-half] letdown in PCs,” Moskowitz wrote in a research note to clients. “While our revised unit growth estimates are edging up, our draconian revenue outlook remains unchanged. We continue to model sub-seasonal sequential trends for the second half of the year.” Demand, he adds, will continue to be slow, and the coming launch of Microsoft’s (MSFT) Windows 7 OS will be no panacea. “So far in the June quarter, our conversations with industry contacts suggest that PC end demand remains soft, and there are increasing concerns of another inventory correction across the food chain if suppliers continue to target normal seasonality in the second half of the year….We have not seen a major PC upgrade cycle related to an operating system launch since 1995, and we do not expect anything different with Windows 7.”

Back in March Gartner predicted that the PC industry would see its sharpest unit decline in history in 2009. Sadly, Moskowitz’s note would seem to bear that out.

And that bodes well for Apple (AAPL). Because while its sales might be slowing along with the rest of the industry (though not nearly as badly; the company’s unit sales rose only nine percent in the December quarter, down from a 44 percent increase in the year prior), its price points and profit margins are holding nice and steady.

And that bodes well for Apple (AAPL). Because while its sales might be slowing along with the rest of the industry (though not nearly as badly; the company’s unit sales rose only nine percent in the December quarter, down from a 44 percent increase in the year prior), its price points and profit margins are holding nice and steady.

The same can apparently be said for the PC market. Research outfit Gartner on Monday warned that PC sales will suffer the “sharpest unit decline in history” this year. Gartner (IT) expects the PC industry to ship just 257 million units this year. That’s an 11.9 percent decline from 2008, one that easily eclipses the previous worst decline in 2001, when shipments fell 3.2 percent.

“The PC industry is facing extraordinary conditions as the global economy continues to weaken, users stretch PC lifetimes and PC suppliers grow increasingly cautious,” said Gartner research director George Shiffler. “Slower GDP growth will generally weaken demand and slow new penetration, lengthening PC lifetimes will reduce replacements, and supplier caution will keep inventories at historic lows.”

I’ll say. Gartner believes desktop shipments will decline a staggering 31.9 percent from 2008. Even an expected 80 percent spike in netbook sales, the lone bright spot in the market, won’t do much to temper that. Bad news for PC manufacturers like Dell (DELL) and HP (HPQ), and for suppliers like Microsoft (MSFT), Intel (INTC) and AMD (AMD) as well.

Thomas Weisel analyst Doug Reid this morning noted that he is “incrementally more cautious” on the company after a survey of 35 “PC experts” over the Black Friday weekend at Best Buy (BBY) stores. Reid writes that Dell remains “a weak competitor” in the retail channel and that “quality problems may be re-emerging.”

Reid says that Dell’s mind share at U.S. retailers “remains weak.” He says sales people preferred Hewlett-Packard (HPQ) over Dell by 5-to-1, asserting that it offers better overall value. “While HP has been sold at Best Buy for much longer than Dell, quantitatively, the results are still somewhat disappointing considering that Dell has been sold at BBY stores for 11 months,” he writes.

Read the rest of this post