The penetration of home PCs in Europe will gradually level out toward 2005, with a compound annual growth rate of 7%. Multi-PC owners — consumers with two or more PCs at home — will increase by 19% annually over the next five years and will drive market growth, offsetting the marginal contribution of first-time-PC owners, according to a new report by Forrester Research B.V. (Nasdaq: FORR).
“European PC sales are leveling off, with increasing PC penetration leading to a saturated home PC market,” commented Edwin van der Harst, senior analyst at Forrester’s European headquarters in Amsterdam. “The spread of home PCs will reach 61% of Europeans by 2005. Northern Europe continues to lead in PC adoption, but the North-South technology gap remains. Almost half of consumers in the Mediterranean region still won’t have a PC at home in five years, versus more than two-thirds of consumers now. These markets will remain four years behind the UK and Germany, and more than five years behind the Nordic markets.”
To analyze the changing nature of PC buying in Europe, Forrester divided consumers into four separate segments: multi-PC owners, replacement-PC owners, first-time-PC owners, and PC holdouts.
Multi-PC owners, currently accounting for 23% of PC owners, will be the largest segment by 2005 with 40%. Multi-PC owners are more likely than other PC owners to be men (61%). They have above-average incomes, are well-educated, and are very likely to use a PC at work (71%). They demand high sophistication and value PCs as educational tools for themselves and their children. They are interested in the latest technology and software and are advanced users, spending more money on other consumer electronics like peripherals and PDAs.
Replacement-PC owners are the stable growth factor, representing one-third of all PC owners. As a group, they are high-income singles or couples who want better peripherals, applications, and games and have moved along the online learning curve. With PC penetration past the early adoption phase, more mainstream, less technology-proficient consumers are buying their first PC. Representing 44% of PC owners, first-time-PC owners have more to learn and less to spend, shop offline, value simplicity, and appreciate lower prices. PC holdouts are consumers who restrict technological uptake to necessities, and PCs don’t qualify. These consumers are technology pessimists, often older women with no children at home, and they have lower education and income.
“The European PC market is a battleground that manufacturers and retailers must fight on four fronts, each with their own challenges,” Van der Harst added. “They must maintain multi-PC households by offering online PC configurations, selling modular PC packages, and focusing strongly on peripherals. Retails must also make replacement-PC owners become multi-PC owners by leveraging peer pressure, offering value for money and PC loyalty rewards, and promoting a sense of independence that an additional PC can provide to the PC owner’s partner. Resellers must make first-time-PC owners upgrade more quickly by clearly explaining the need for a change of PC, offering in-person service, allowing customers to return their old PCs, and using offline media as the main marketing medium. Finally, they need to appeal to PC holdouts — the 175 million European consumers who have no home PC. This will be achieved by keeping PCs affordable and explaining what PCs do for them.”
Forrester’s Technographics 2000 Europe Benchmark Study, which deals with all aspects of consumer technology adoption, including PC usage in 11 markets, formed the basis for these PC user segments. These segments were then modeled for growth in 17 countries over the next five years, based on each group’s buying behavior and usage patterns. Our assumptions and source data are consistent with both Forrester’s recent work examining the growth of Internet-related technologies across Europe and external forecasts of PC industry shipments into Europe.