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Notebook PC sales brighten quarter

Sales growth for notebooks helps offset the decline in desktop PC sales, offering a beacon of hope for PC makers amid 2001's tumult.

Notebook sales came to the rescue for U.S. retail PC manufacturers who were facing an otherwise dismal fourth quarter, market tracker NPD Techworld will report later this week.

Because of strong holiday purchases, the number of notebooks sold grew 21.5 percent year over year during the fourth quarter of 2001 and 7.9 percent for the entire year.

Meanwhile, desktop PCs declined by 19.9 percent year over year during the fourth quarter and 23 percent for the year.

The much stronger year-over-year sales growth for notebooks helped offset the decline in desktop PC sales, offering a beacon of hope for PC makers amid 2001's tumult.

PC manufacturers and peripherals makers also helped by offering special rebates to entice buyers.

Thanks to consumers, "the fourth quarter wasn't as bad as the rest of the year was," said Steve Baker, an analyst with NPD Techworld (formerly NPD Intelect). The fourth quarter became "notebook heaven" for PC makers, he said.

The increase in notebooks sold helped boost revenue in the PC industry. Revenue from computers and related peripherals rose by 3.5 percent from 2000. However, removing PCs from the equation, revenue rose nearly 11 percent in 2001.

One big factor in the jump in notebook sales was price. The average fourth-quarter retail price for a notebook fell about $200, from $1,655 in 2000 to $1,444 in 2001, Baker said. When priced around $1,450, a notebook costs only a little more than the $900 to $1,000 price of a desktop fitted with a flat-panel display.

The notebook phenomenon "speaks to the kind of buyer that's out there. People who are buying a second or third PC are more likely to buy a notebook than a first timer," Baker said.

Second-time buyers may be willing to spend more to get what they want, including greater portability.

However, desktops continue to outsell notebooks at retail stores by about a 3-to-1 ratio.

PC market contracted
Despite the boost in notebook sales for the quarter, the number of all PC units sold at retail stores declined for the year. They slipped to 1998 levels of 5.9 million units, which is a 22.4 percent drop from the number of units sold in 2000, according to NPD Techworld. Worldwide, the PC market contracted by about 5 percent in 2001, with all manufacturers shipping about 128 million units, according to Gartner.

With 2001 ending on a high note for notebooks, it's a sign that 2002 sales could return to more normal levels. But analysts aren't ready to issue too rosy an outlook for the first half of 2002.

"We're not looking for anything particularly positive to happen. The market is, I think, still weak, and there are a lot of questions at the manufacturer and retailer level," Baker said.

Among other things, uncertainties surround what will happen if the two largest retail PC companies, Hewlett-Packard and Compaq Computer, merge as they have proposed.

In addition, "we're still looking at people spending money on other products," Baker said. "People are making choices on what they're going to spend their money on, and right now...they're spending outside the box."

Instead of PCs, consumers continue to buy hardware such as personal digital assistants, MP3 players, cameras, monitors, printers and even extra memory, he said.