Earlier, the company had been expecting low-double-digit PC growth this year.
But, the latest outlook from Intel is still higher than third-party estimates.
Our 2011 industry forecast for branded PC shipments is 2 percent, at the low end of consensus of 2 percent to 4 percent, mainly due to tablet cannibalization, Jefferies analyst Peter Misek wrote in a note to clients.
Based on his checks, Misek said, Dell (NASDAQ:DELL) is benefiting from the enterprise PC refresh cycle, Hewlett-Packard (NYSE:HPQ) is more exposed to tablet cannibalization.
We continue to expect near-term upside for Dell and near-term risk to HP, Misek added.
The analyst believes tablets are cannibalizing consumer notebooks and are the biggest driver in the deterioration of consumer notebook shipments.
We expect tablets to cannibalize more enterprise notebooks as we get into 2012. Our PC forecasts assume a 30 percent tablet cannibalization rate, 70 million tablets shipped in 2011, and 158 million shipped in 2012, the analyst wrote.
HP's sales from Personal Systems Group, which sells consumer PCs, has been falling since the first quarter of 2011. For the quarter ended April 30, the division's sales fell 5 percent to $9.41 billion.
Dell is also witnessing decline in PC sales and recorded sales of $3.3 billion from Desktop PCs for the quarter ended April 29. This represents a drop of 8 percent from the same period last year.
While nobody knows the tablet cannibalization impact on PCs, FBR Capital Markets analyst Craig Berger expects every 2.5 tablets sold now cannibalizes one PC.
With Apple set to build 35 million to 40 million tablets in 2011, and with another 20 million to 30 million tablets coming from Samsung, RIM, Motorola and others, Berger thinks 60 to 70 million tablets will cannibalize 24 to 28 million PCs in 2011, a 6 to 8 percent unit impact on PC growth rates.
Meanwhile, International Data Corp (IDC), said worldwide PC shipments rose 2.6 percent in the second quarter of 2011. However, the U.S. PC market continued to contract in the second quarter, due to an ongoing contraction in Netbook market and related inventories.
Demand has softened as corporate buyers continue to focus on increasing share of their IT budget in new IT solutions such as Cloud and Virtualization, and consumer interest shifts to media tablets, IDC's research analyst Rajani Singh said.
Given the weakness of 2H10, we expect a better market environment in 2H11 with mid-single digit growth rates in the third quarter's back to school and fourth quarter's holiday season, Singh added.
Shares of HP closed Wednesday's regular trading session at $35.28 on the NYSE, while Dell ended at $17.52 on NASDAQ.