Quanta: Notebook PC Demand Strong in Q4 2006 Despite Vista Delay

The world’s largest maker of laptop computers expects healthy demand through the end of the year despite the delayed launch of Microsoft.’s Windows Vista OS.

But the Taiwanese company warned that shortages of components, including batteries, microprocessors and memory chips, could affect shipments.

The statement on Vista should assuage some fears of a meltdown in laptop sales ahead of the widespread release of the OS, since Quanta Computer has a broad view of the industry. The company supplies laptops to major PC vendors such as Dell and Hewlett-Packard Co. and should have most of its year-end orders already in hand.

The company expects unit shipments to rise 30 percent quarter-on-quarter in the fourth quarter of this year due to healthy end-demand and the launch of new notebook PC models, Quanta executives said Tuesday.

The last three months of the year are typically strong for notebook PCs because of brisk holiday demand.

This year, however, Vista’s delayed launch to early next year has put fourth quarter PC sales in doubt. A number of PC vendors and industry watchers have voiced concerns over a possible downturn late this year as users put off new purchases until after Vista launches.

Signs of trouble for desktop PCs have already emerged. Demand for desktop motherboards plummeted in the last few weeks of October, according to The Goldman Sachs Group and Merrill Lynch & Co. Analysts from both investment firms blamed Vista for the drop-off.

Merrill Lynch cut its forecast for fourth quarter PC shipments to just 10 percent growth over the third quarter, down from an earlier projection of 15 percent and far below historical growth of 20 percent, Taipei analyst Tony Tseng wrote in a Monday report.

Microsoft even announced last week that it would offer an upgrade coupon to users who buy a Vista-capable PC from now through March 15, 2007, in an effort to mollify fears among hardware vendors that Vista delays will dampen holiday PC sales. The new OS was originally expected out earlier this year.

Vista places greater demands on PC hardware, and companies are already placing Vista-capable stickers on new computers with the configuration to match Vista’s requirements, which include 512M bytes of RAM, an advanced processor and a graphics card.

Vista won’t have such a dramatic impact on notebook PC demand, but contract laptop makers in Taiwan say component supply troubles could spoil the Christmas party.

Quanta was the second major laptop computer maker to warn of component supply shortages. Compal Electronics, the second biggest notebook PC maker, blamed a shortage of certain processors and batteries for revising down its unit shipment forecast for the fourth quarter. The company projects it will only be able to ship 4.6 million laptops in the three months ending Dec. 31, down from a prior estimate of 4.8 million to 5 million.

Quanta said it has not been affected by component shortages so far, and that a recall of laptop batteries hasn’t had any impact on the company. Quanta and Compal produce around half of the world’s laptop PCs.

A massive recall of 9.6 million laptop batteries by major PC vendors such as Dell and Apple Computer has caused a shortage of batteries because it comes at the time of peak laptop demand for the year. The recall was due to defective Sony parts that can cause the batteries to overheat and possibly catch fire.

-Dan Nystedt, IDG News Service (Taipei Bureau)

Related Links:

• Weak Computer Sales Slow Chip Industry Growth

• Plunging Desktop Demand Could Mean Bargains for Users

• Sony Battery Recalls: Who’s Next?

• Microsoft Offers Windows Vista Upgrade Coupons

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