Drop in PC demand might bring bargains

Motherboard orders for the desktop PC market are down by nearly 20 per cent compared with its peak in early October

The recent plunge in demand for desktop computers could lead to greater bargains, according to an analyst.

The demand for desktops "is falling off a cliff" as users wait to purchase machines until Microsoft releases Windows Vista in January, investment banking firm Goldman Sachs stated.

Motherboard orders for the desktop PC market are down by nearly 20 per cent compared with its peak in early October.

"Motherboard demand weakness is in line with our view that Vista has a negative impact on (fourth quarter) motherboard demand, but it happened earlier and more significantly than we expected," said Henry King, executive director of technology research for Goldman Sachs.

Demand still high

He also blamed a shortage of low-cost Intel microprocessors and AMD 's AM2 processors for the drop in demand, since it means there are fewer low-cost PCs on the market. Demand for low-cost PCs remains hot, he said.

Rising user demand for notebook computers is also pushing demand for desktop motherboards down, he said.

As motherboards and other desktop PC components pile up this side of Christmas, King believes companies will start a price war to clear their inventories.

The notebook sector is also facing some trouble. Strong user demand for notebook PCs is causing a shortage of components, King said.

Stock shortage

At an investors' conference last week, Acer executives said they expected to be able to procure only 95 per cent of the components they needed to sell notebook PCs in the fourth quarter, which is the peak season.

"Since the second half of August, we've seen demand rush in. We can't fill all our [notebook] orders," said Gianfranco Lanci, president of Acer, at the conference. The world's fourth largest PC vendor expects a short supply of notebook batteries as well as microprocessors.

The massive recall of defective Sony notebook batteries by major PC vendors such as Dell and Apple has caused a shortage of batteries because it comes at the time of peak notebook demand for the year. Sony expects the recall to total around 9.6 million batteries.