Aggressive pricing and wider array of products boosted Compaq Computer into the No. 1 market share position for notebooks, the first time in roughly three years that the notebook leader has not been Toshiba, acccording to a major market research firm.
Compaq's hold on the top spot in notebooks may be temporary-- Toshiba is reacting with a renewed offensive--but increased competition in this market, combined with strategic missteps by Toshiba, point to the fact that the balance of power is shifting in the notebook realm. (See related story)
Compaq achieved a 28.8 percent market share in the dealer and retail channels in September, compared to a 25.3 percent share for Toshiba, according to Matt Sargent, an analyst with Computer Intelligence. The month before, Compaq had a 22.1 percent market share compared to 31.8 percent share for Toshiba.
Toshiba, however, is expected to hold on to its No. 1 status for the whole of the third quarter, according to yet-to-be-released data from International Data Corporation (IDC). Nevertheless, IDC concurs that Toshiba market share is steadily decreasing.
The key to Compaq's surge was in the retail market, Sargent noted. Amazingly, in retail sales, Compaq went from a 14 percent market share to a staggering 42.4 percent market share. The Presario 1210, a 150-MHz Pentium notebook released during the quarter, accounted for 25.5 percent of all retail notebook sales.
At the same time, Toshiba sank from a 45.1 percent market share to a 24.3 percent share. Other vendors are nowhere near as active in this market as Compaq and Toshiba.
Price has been a huge factor in Compaq's rise, explained Sargent. Toshiba traditionally has occupied the value segments of the market while other vendors have tried to capture high-end customers. Now, the high-end providers are moving down the food chain.
"For the first time Compaq matched Toshiba in pricing. They've always been $200 more expensive," Sargent said.
Pricing in fact appears to track the market-share shift. In July, the average price of a Toshiba notebook was $2,107 compared to $2,709 for Compaq, a $602 difference. By September, Toshiba's average price was $2,294, compared to $2,394 for Compaq.
Retail sales account for a minority of notebook sales, but are growing, said Sargent. Approximately 20 to 25 percent of notebooks get sold through retail, but the market is growing at 26 percent clip, currently faster than the business market.
Despite the spike in Compaq's growth, Toshiba could well reemerge as the overall leader because of its place in the dealer channel, which sells to businesses. In the dealer channel Compaq remained the No. 3 provider, behind Toshiba and IBM. For the first half of the year, IBM was the No. 1 notebook vendor in the dealer channel, but failed to achieve the overall top position because it lacked a retail presence, Computer Intelligence reported earlier.
Still, Toshiba's lead in that market has been eroding over time, analysts point out. In the past year, a number of major vendors such as Hewlett-Packard and Dell have reentered the notebook market with new vigor and a broader array of products to capture more notebook sales. Toshiba has lost market share as a result of these trends.
Randy Guisto, an analyst at IDC said that Toshiba will be named the No.1 notebook manufacturer for the third quarter, although market share has been slipping for the company. In the second quarter, for instance, Toshiba held a 19 percent market share, the first time that the company dipped below the 20 percent mark for some time.