Mobile- and desktop-PC prices in the US will fall this year as computer vendors lower profit margins and enter an "intense battle for market share", says market research firm the Gartner Group.

Dell and Gateway will try to seize market share from Compaq, Hewlett-Packard and IBM, according the Gartner Group.

The direct vendors' weapon will be lower margins, causing "others to give serious thought about how they run their PC business", said Dataquest Group - a division of Gartner Group - vice president and research fellow Martin Reynolds.

Continued growth Despite the economic slowdown, Dataquest forecasts a 10.7 per cent growth in desktop and mobile PC sales in 2001. US shipments are expected to grow from 130.5 million units last year to 144.5 million units this year.

However, growth across-the-board is expected to slow down, said Dataquest. It citied the general economic situation as well as the saturation of important PC markets - such as the US, Canada and Western Europe. In these markets the industry depends on hardware replacements for shipments to grow, according to Dataquest.

In less saturated markets, such as Latin America, the industry might be able to stimulate growth through "judicious price-cutting and shrewd marketing campaigns", said Dataquest, but those efforts could "well be undercut by poor economic circumstances".

Further into the future, Dataquest is forecasting a sequential growth of 14.5 per cent to 165.5 million units shipped in 2002. After that growth will dip to 8.6 per cent, 179.7 million units, in 2003 and pick up a bit at 9.7 per cent, 197.2 million units, in 2004.