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Originally published Thursday, January 15, 2009 at 12:00 AM

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Brier Dudley

Economic woes take byte out of PC sales

No wonder there's been so much buzz about layoffs at Microsoft: PC sales just stank in the past quarter.

Seattle Times staff columnist

Excerpts from the blog

No wonder there's been so much buzz about layoffs at Microsoft: PC sales just stank in the past quarter.

Mirroring the awful fourth quarter for overall retail sales, PC sales fell 0.4 percent, according to a new report from research firm IDC.

The holiday-season drop pulled annual PC sales growth down to 10.5 percent, after averaging 15 percent a year over the last five years.

"As expected, demand for PCs in the U.S. faced a challenging environment, with a substantial reduction in spending among both consumer and commercial segments amid tightening credit, eroding confidence, and growing unemployment," IDC's Doug Bell said in the release.

He added that "the first half of 2009 looks pretty shaky as the economic fundamentals need to recover before spending on PCs will resume."

IDC said sales of portable computers — including laptops and netbooks — continued to grow, but the growth rate fell by about half, to 20 percent from 40 percent.

The firm estimated that about 5 million netbooks were sold in the fourth quarter and 10 million through the year, and shipments will double in 2009.

Desktop PC sales pulled the overall volume down 16 percent.

HP remained the biggest PC seller and Acer and Toshiba posted big gains globally, largely because of their strong lineup of portable computers.

In the U.S., Apple continued to gain share. At year-end, Macs had 7.7 percent of the PC market, up from 6.2 percent the year before. But Acer was the big success story, jumping to 9.1 percent from 5.8 percent of the U.S. market with 62 percent growth during the year.

Moderating the Xbox

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Xbox is seeking families to serve as "Get Game Smart Ambassadors" to help "educate their peers on making smart media choices." Families can nominate themselves by submitting short videos explaining their approach to a "responsible digital lifestyle, including rules related to video gaming." Winners will get prizes such as Xbox 360 systems, Zune players, games and cash.

It sounds like a gaming cousin of Microsoft's MVP program for software developers, but this one highlights one of the Xbox's big selling points for families, its advanced parental control capabilities. The campaign also includes a sweepstakes for families that work through "challenges" that offer advice on managing game and TV use in the home. It's all at a new site, getgamesmart.com.

It's good that Xbox is helping families better manage screen time, and it's a clever way to position the 360 as a family-friendly alternative to the Wii.

But it's clearly coming from a company that would like teens and families to buy and play more games. For more perspective, here's a 2006 study of the effects of screen time on school performance published in Pediatrics, the Official Journal of the American Academy of Pediatrics.

Its conclusion: The more time kids spend on video games, TV and movies, the worse they do in school.

From the introduction:

"Based on previous studies, screen time is an obvious choice as a mediator for a detrimental effect on school performance, because it "displaces" time that would normally be spent doing schoolwork, reading for pleasure, or engaging in other educational activities."

Yet video games are an inescapable part of our culture now, so it comes down to finding a balance. Teens can also make a pretty good argument that games are a promising career opportunity, especially around the Seattle area.

Xbox boss Robbie Bach, the chief family ambassador for the business group, shared a little bit about the approach taken in his house. From the news release:

"In our house, we strongly believe that a balance between media use and other activities is necessary and we've established rules for our family to make sure our kids are spending quality time on their school work and being active. Though our kids love their games and we want them to have fun, we also want them to find entertainment in a variety of ways — whether it's sports, music or playing outside with friends. Diversity and balance are key."

Smartsheet's funding

Bellevue's Smartsheet has raised $1.25 million in B-round funding from Madrona Venture Group and Smartsheet's chairman, Brent Frei, who co-founded Onyx Software and worked at Microsoft.

Smartsheet will use the money for product development and outreach efforts in selected markets. Its online work management tools now have more than 65,000 users in 30 countries.

The new money brings the company's total funding to $5.56 million since it began in 2006.

This material has been edited for print publication.

Brier Dudley's blog appears Thursdays. Reach him at 206-515-5687 or bdudley@seattletimes.com.

Copyright © 2009 The Seattle Times Company

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About Brier Dudley
Brier Dudley offers a critical look at technology and business issues affecting the Northwest.
bdudley@seattletimes.com | 206-515-5687

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