PC sales surge in Asia-Pacific, Latin America

Sales of PCs continue to rise in the regions, based on equal parts improving economic conditions and price erosion, according to two new reports today.

3 min read
Sales of PCs continued a strong upward surge in the Asia-Pacific and Latin American regions, based on equal parts stronger economic conditions and price erosion, according to two new reports today.

In the second quarter, the Asia-Pacific region showed no signs of slowing down this year after a horrid 1998. International Data Corporation said shipments of PCs in the region, which excludes Japan, hurdled the 3 million mark for the first time ever. Shipments surged 34 percent from the same period a year ago and 18 percent from the previous quarter.

In Latin America, Dataquest said personal computer shipments in the second quarter increased 19 percent over the same period a year ago. Sales in Mexico were particularly strong, climbing 68 percent over the second quarter of 1998.

The results should alleviate concerns that spending on PC hardware would decrease in 1999 as customers prepare for Y2K glitches, and could be an indication that Asia continues to recover from the financial crisis of 1997.

In fact, IDC said the strong second-quarter results may cause the company to raise its forecast for annual growth in the Asia-Pacific region upward from its current projection of 23 percent. Factors that sparked the region included economic recovery in many countries, price erosion, and government and Y2K-related spending. "Free PC" programs, which have proven popular in the United States, also have started to make an impact.

A number of programs that subsidize PC purchases through Internet service contracts were introduced; so far, the biggest impact of these programs was to force other PC makers to market their systems more aggressively, said Kitty Fok, research manager at IDC Asia/Pacific, in her report.

How Compaq, Dell fared
In terms of worldwide PC shipments, Compaq and Dell are the biggest players. Compaq has severely stumbled of late while Dell's profit machine continues to roll, but the two companies are of the same mind when it comes to the international markets: Global expansion will help to fuel growth.

Compaq's success in Latin America was driven by an aggressive price and services strategy, said Luis Anavitarte, senior analyst with Dataquest, in his report. Compaq grew sales in Latin America 46 percent over the same period a year ago and it now holds a 15-point lead over second place IBM.

Compaq's next move in the region will be to boost Internet sales by opening online stores tailored to each country.

Dell is also focused on international expansion as a means to keep up its torrid pace of revenue growth. The company's CFO, Tom Meredith, said earlier this week that international growth could be one area that could contribute another $10 billion in revenue to the company during the next several years.

In Latin America, Dell grew shipments 110 percent, although its share of the market still puts the company in fifth place behind Hewlett-Packard. Compaq is the leader with 23.6 percent market share and IBM is second with 8.7 percent. HP and Dell each have less than 5 percent market share.

In Asia, the company is moving its regional headquarters to Singapore from Hong Kong in an effort to take better advantage of opportunities in the region. For the most recently completed quarter, 7 percent of sales came from the Asia, IDC said.

IDC reported that IBM had 9 percent of sales in Asia, compared with Compaq's 7.5 percent. Chinese vendor Legend remained the region's third-largest seller.

Bloomberg contributed to this report.