Toshiba retakes notebook lead for now

The PC maker had struggled with inventory overload last year. But Toshiba was the No. 1 notebook company in the retail channel in the fourth quarter of 1998, as well as the top overall notebook maker, according to three market research firms.

"The key aspect is the strong product. We have new industrial designs for each of our key product areas, and we're much more in synch with customer demands," said Jeffrey Friederichs, vice president of marketing for Toshiba.

Toshiba accounted for 17.6 percent of notebook shipments in the fourth quarter of 1998, according to market research firm International Data Corporation, ahead of No. 2 Compaq.

Additionally, Toshiba sold slightly more than 30 percent of all notebooks in the retail and mail order market as well, while Compaq sold 27.2 percent of all notebooks, according to PC Data, a market research firm that covers the retail channel. PC Data's numbers did not include notebooks sold from direct manufacturers such as Gateway.

Earlier last year, Toshiba had lost market share to rival notebook maker Compaq because of bloated inventory levels in the retail channel, meaning stores were stocked up with Toshiba notebooks that weren't selling fast enough. The situation reversed itself in the third and fourth quarters, and Toshiba regained the lead, according to data from IDC.

"They get high numbers in the retail and mail order market," said PC Data analyst Stephen Baker. "They're pretty much consistently ahead now-- they've been ahead for 8 months now."

Although Compaq offers aggressive discounts and rebates, Toshiba notebooks are consistently priced $100-$150 lower, Baker said. "For these kind of notebooks, you've got to be priced right. You're not going to sell a lot of $3,500 notebooks in stores or mail order."

Toshiba cut prices on its notebooks each month in the fourth quarter.

In a move to strengthen its low-end offerings, Toshiba recently announced it would begin featuring processors from Advanced Micro Devices in its Satellite notebooks. Toshiba unveiled the Satellite 2545XCDT and 2545CDS, which include the 333-MHz K6-2. By including the less-expensive AMD processor, Toshiba is able to stuff the CDT model with fancy notebook features such as a 14.1-inch Active matrix LCD screen and 64MB of memory for $1,899.

"We've had a very good response," on the AMD notebooks, Friederichs said, "but we always do on a new product."

Toshiba was also No. 1 in sales to customers, according to research the company cited from Audits and Surveys. Toshiba earned 26.6 of the market in all combined distribution channels, including mail order, retail, and computer superstores, the market research firm found.

Audits and Surveys measures sales from a different angle than IDC. IDC tracks sales from the manufacturers to wholesalers and dealers. Audits, meanwhile, tracks sales from dealers to customers. The Audits number is significant because it indicates that inventory is not necessarily building up in the wholesale channel, which can dampen sales in future quarters.

"We intentionally tried to lower channel inventory position," in the fourth quarter, Friederichs said. "We have extremely low inventories, and with the efficiency of the business model it makes it much easier to be responsive to the dynamic changes in the market," like component price fluctuations, he said.