UK PC vendors face some tough strategy choices as desktop sales decline and lower-cost notebooks erode profit margins, despite the fact that the volume of PCs sold is on the increase.

Figures from analyst Gartner indicate sales of business and consumer desktop PCs in the UK in the first quarter of 2008 declined 15 per cent year on year.

Vendors are seeking ways to offset desktop losses by price cutting to gain market share, streamlining costs in their own supply chains, and tempting customers with greener desktops that emphasise low power consumption.

For example, Lenovo started shipping high-end business workstations to boost its profits earlier this year, and will shortly start selling single and dual-processor servers, using x86 technology licensed from former owner IBM.

“Even if there is decline in desktops, there is still opportunity, and we can enter new markets with products such as servers and workstations,” said Lenovo European president Milko Van Duijl.

“The desktop PC market might be stagnant in many places but 45 million units were sold worldwide, representing a $37bn (£19bn) market. It is still a huge market with lots of potential for differential between competitors,” said Van Duijl.

Gartner estimates combined sales of desktop and notebook PCs in the UK increased by 11 per cent year on year to 3.1 million units in the first quarter of 2008. “The impact of an economic slowdown and the credit crunch has not affected the PC market yet,” said Gartner analyst Ranjit Atwal.