Slowing consumer demand and a softening business climate in the US have hit PC sales hard, according to International Data Corporation's (IDC) latest report.

Recent announcements from PC manufacturers, including Apple, IBM, Dell and Gateway have underlined the importance of the slowdown. As a result, Gateway has been forced to lay off ten per cent of staff and Apple has returned its first loss-making quarter in three years.

Low growth Worldwide 36.7 million units were sold in the fourth quarter of 2000 – while this shows growth of 9.2 per cent, this growth was less than analysts originally expected.

The US market saw growth of only 0.3 per cent in the fourth quarter of 2000, falling 3.6 per cent from the third quarter to the fourth quarter, IDC said.

Asia and the emerging economies returned better results, but IDC believes that overall the figures suggest that the PC market has reached saturation much sooner than industry experts expected.

Roger Kay, manager of IDC's PC program, said: "I think that at one point, not very long ago, we thought that PC penetration in US households would reach 99 or 98 per cent. We don't believe that anymore."

Internet devices He said PC sales are likely, over time, to make room for alternative devices for Internet access – although those devices have yet to make major inroads in the US market.

"In anticipation, people are not buying the other things. They're thinking, I don't really want to buy a PC, because maybe I'll do better with one of those cool screen things."

European PC sales, as measured by the UK research firm Context Information Services, rose 6.9 per cent in the fourth quarter over the same period in 1999. While there are few signs of a US-style economic slowdown in Europe, the PC market may be reaching saturation on the continent more quickly than expected, the company said.

Consumers' needs Non-PC devices, such as interactive television and Internet-enabled mobile phones, may be fulfilling consumers' needs, Context added.

During his keynote speech at Macworld Expo, San Francisco, Apple CEO Steve Jobs had his own spin on the situation. He announced Apple's vision – Apple as a digital hub at the centre of the "digital lifestyle", adding value to the plethora of digital devices available.

He dismissed analysts and manufacturers fears of the demise of the personal computer, saying instead that we are "about to enter the third great age of the PC", which will focus on our digital lifestyles. "We don't think the PC is waning," said Jobs, "We believe that it is evolving."