PC sales strong in first quarter

Despite well-publicized problems with bloated inventories, declining Asian revenues, and seasonal sales slumps, PC sales exhibited strong growth for the first quarter of 1998, according to two marketing research firms.

Hewlett-Packard (HP) was a standout, as it makes a bid to become a top-five PC vendor in the United States. HP is now ranked No.6 in the U.S. with 7.7 percent of the market, but is expected to replace Packard-Bell-NEC at the No.5 slot, according to International Data Corporation (IDC).

CNET Radio talks to IDC's John Brown

Driven by the major PC vendors, total PC sales for the first quarter of 1998 grew substantially from the same period last year, according to data from Dataquest and IDC.

Total worldwide PC sales grew 14 percent over the same period last year, both IDC and Dataquest found. IDC found sales down 11 percent from the fourth quarter of 1997, which is less than typical historic first quarter sales dips, according to analyst Kevin Hause.

Worldwide, Compaq Computer stayed in the No. 1 slot and IBM was No. 2, followed by Dell, Hewlett-Packard, and Packard Bell NEC, according to Dataquest.

As in the past, the top PC vendors solidified their hold on the market this quarter, accounting for 53 percent of the market, up from 46 percent a year ago.

"The big are getting bigger," Hause said. "They're growing at multiples of the market."

Both market research firms found that Compaq and Dell took the No. 1 and No. 2 spots in U.S. sales this quarter, capturing more than 17 percent and 11 percent of the market, respectively. Gateway and IBM also placed in the top five in both firms' surveys.

Packard Bell NEC also placed in one of the top spots, but its sales growth in the United States was off significantly compared to other firms' growth. IBM's growth was tepid, according to both market researchers.

Although HP didn't crack the top five in the United States on either list, "that's not for lack of significant growth," Hause said. He noted that the PC maker racked up 69 percent growth this quarter compared with the same year-ago period.

Now placed at No. 6 with a 7.7 percent share, HP is expected to soon pass Packard Bell NEC.

The quarter's data indicates that the industry is growing at a fast enough pace to offset its difficulties. Sales were impacted by the Asian currency crisis, yet European and American demand more than made up for sluggish Japanese revenues.

"Western Europe is doing very well--almost surprisingly well," Hause said. (See related story) "The combined markets are enough to offset the significant fall-off in Asia."

In addition, Compaq's channel bloat was balanced by the soaring sales of direct vendors Dell and Gateway, according to Hause.

"End user demand appears healthy," he said. "There was a lot of concern as inventory built up that the product wasn't moving. But that definitely is not the case, indicated by the success of [direct vendors] Dell and Gateway."