SAN FRANCISCO – The combination of firming global IT demand, the release of Windows 7 and an aging PC installed base will drive a strong multiyear PC replacement cycle, says a leading analyst. 

Deutsche Bank Equity Research today raised its 2009 PC unit outlook from a drop of 8% year-over-year to a drop of 2%. For 2010, the firm now expects PC units to rise 10% year-over-year, up from a prior estimate calling for a flat year.

In addition, the firm initiated a 2011 unit estimate increase of 12% year-over-year, and 12% in 2012.

In issuing the report, the firm said it appears the PC cycle has bottomed, as third-quarter PC end demand has been tracking better than expected. In addition, supply chain data continue to improve, suggesting strong initial channel demand heading into the fall launch of Windows 7. In past OS releases, the PC market has enjoyed a five- to 10-point acceleration within six months, and 10 to 20 points within 12 months, DB said.

The firm estimates the average age of the installed base has increased roughly six to 12 months in the past year. Its PC model assumes the average age remains flat next year, and will decrease by a month in 2011 and 2012, respectively, due to the combination of macro relief and the adoption of Windows 7.

PC unit growth is expected to accelerate through the second half of next year. In addition, it is expected older XP machines will be the first to be upgraded, representing approximately 75% of the corporate installed base.

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