Hints of Recovery

Have you ever noticed that when things are at their worst, you can always find a few hints of a recovery? In the midst of a patch of snow, yellow and purple crocus blooms promise that Spring will follow shortly. Where are the blooms in electronics?

We all agree that recent news seems dire. Early in March, market research company IDC announced that PC shipments would drop 4.5% in 2009. Worldwide PC shipments fell 1.9% in Q’04 2008 following five years of almost uninterrupted double-digit growth, IDC reported. Also check out Henderson Ventures' recent report on the PC sector. As the economic environment continues to deteriorate in 2009, PC shipments are expected to fall by more than 8% in the first half of the year, and gradually improve in Q’04 2009 to a small positive growth, IDC said. Is that a crocus?

Further, the U.S. was the destination for 37% of PC shipments in 2000. In 2008, the U.S. share is down to 23% and emerging markets are up to 49%. So the shift of markets for PCs continues to show. A crocus in the PC market is in notebooks and ultra portable devices. Who thought that the mobile Internet device (MID) would be such a success story for Intel’s Atom processor?

Speaking of Intel, if you only noticed that Intel is closing three assembly test facilities in Southeast Asia, and has cut staff accordingly, you might have missed that it is bringing up a new assembly test facility in Vietnam later this year. Closing older facilities in a slower cycle and investing in a growing, more cost-efficient area is smart business.

Most of us have wandered into Circuit City, if only to drool over the flat screen TVs and generally look for a bargain before that company closed its 567 U.S. stores permanently. How sad to think of all those employees from the nation’s second-largest electronics retailer having to look for employment. How many knowledgable electronics sellers can Best Buy absorb? Some may have sought employment at Staples, since this retailer has begun supplying notebooks and PCs more than ever. And although they don’t claim to be a “genius” crew as Apple uses, the employees in the PC area are hands-on at Staples. Markets are shifting for certain.

For the economy as a whole, even experts are guessing when recovery will begin, though many have come up with a safe Q’01 2010 estimate. Right now, I’m willing to watch for crocus buds until the daffodils, tulips, and forsythia — so to speak — light up the PCB market.

Gail Flower, editor-at-large