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Studies: PC sales down, but could be worse

IDC and Dataquest say U.S. and worldwide PC sales fell in the second quarter and slowed significantly in some unexpected areas.

The PC malaise is spreading.


Gartner analysts Todd Kort, Martin Reynolds and Mikako Kitagawa say the U.S. economic slowdown is having a growing impact on other regions in the world, and the PC industry continues to be affected.

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PC sales fell worldwide in the second quarter and slowed significantly in some unexpected areas, such as Japan, according to preliminary market-share numbers to be announced Friday by Dataquest and IDC.

The two research companies agree that worldwide and U.S. PC markets both shrank during the quarter.

Dataquest's figures show that international PC shipments declined 1.9 percent from the same period a year ago, to 30.4 million units--the first time since 1986 that worldwide sales have fallen. Meanwhile, U.S. sales declined 6.1 percent, to 10.7 million units--below Dataquest's previous expectation.

IDC said economic woes pushed the U.S. PC market down by about 8.1 percent year over year, to 10.5 million, but the researcher said the decline was within expectations. International sales were down 2 percent, to 29.8 million units.

If there's any good news, it's that pessimists were wrong.

"It's not worse than previously projected," said Loren Loverde, director of IDC's Worldwide PC Tracker service. "What that indicates is that the decline is not going to be deeper and longer than we were previously looking at."

The U.S. consumer PC market has slowed markedly since late last year, and it's not alone. "I think we're starting to see some of the corporate spending slow as well," said Todd Kort, a principal analyst at Gartner. "It shows that the economic malaise we're in (in the United States) is spreading. It's a big problem."

Preliminary PC unit shipments in U.S. for second quarter 2001
Company % Q2 2001 market share % Q2 2000 market share % growth, units

Gartner Dataquest
Dell 23.6 19.2 15.2
Compaq 12.9 14.6 -17.3
Hewlett-Packard 9.2 10.7 -18.8
Gateway 7.4 8.3 -16.3
IBM 5.9 6.3 -10.7
Others 40.9 40.9 -6.0

International Data Corp.
Dell 24.0 20.1 9.8
Compaq 12.7 14.8 -21.3
Hewlett-Packard 9.4 10.7 -18.8
Gateway 7.6 8.4 -17.2
IBM 6.1 6.2 -10.6
Others 40.2 39.8 -7.0
Sources: Gartner Dataquest, IDC
PC makers are looking to the Oct. 25 release of Windows XP, the new version of Microsoft's operating system, to boost fourth-quarter sales.

The worldwide slump is the result of lagging sales in the United States and Europe.

Other areas showed modest growth, though far below that of the previous year. Dataquest expects Japan to grow 5 percent year over year in the second quarter and the Asia-Pacific to increase 9 percent. Early data suggest Latin America will grow by 11 percent, after posting tremendous 49 percent year-over-year growth in the second quarter of 2000.

IDC's Loverde found the news that growth in Japan had slowed most troubling, overall, because it was least anticipated.

"Japan looks like it slowed down quite a bit. That was a surprise, because it looked like it was more resilient than the rest of the world," he said. "We expect that those are longer-term issues that take a couple of quarters to resolve.

"It means that this slow economy is affecting other geographies...more than expected," Loverde said.

IDC says the slowdown in Japan involves commercial and consumer sales.

In terms of market share, Dell Computer fared best, posting about double-digit annual growth in the United States and worldwide, and retaining the No. 1 sales spot in both markets. The rest of the top five PC makers' sales declined, IDC and Dataquest reported.

Preliminary worldwide PC unit shipments for second quarter 2001
Company % Q2 2001 market share % Q2 2000 market share % growth, units

Gartner Dataquest
Dell 13.1 10.7 20.2
Compaq 11.2 12.8 -14.4
IBM 7.0 7.4 -6.9
Hewlett-Packard 6.8 7.3 -8.5
NEC 4.1 4.4 -8.5
Others 57.8 57.4 -1.3

International Data Corp.
Dell 13.4 11.4 15.0
Compaq 12.1 13.2 -10.5
IBM 7.2 7.4 -5.6
Hewlett-Packard 6.9 7.4 -8.6
Fujitsu Siemens 4.6 4.6 -1.1
Others 55.9 56.0 -2.1
Sources: Gartner Dataquest, IDC
Loverde said Dell's success comes from its direct-sales business plan, which allows it to quickly respond to market changes such as falling component prices. Coupled with its focus on stronger corporate sales, Dell's model has allowed it to cut prices without trimming its margins to the bone, he said.

The company grew 15 percent in the United States and 20 percent worldwide, according to Dataquest. That compares with IDC's 9.8 percent U.S. growth and 15 percent worldwide growth.

Dell led global PC sales with 4 million units, followed by Compaq with 3.4 million, according to Dataquest. IBM claimed the third spot with 2.13 million and found Hewlett-Packard's 2.07 million sales nipping at its heels. NEC rounded out the top five with 1.26 million.

Domestically, Dell trounced the other box makers, with 2.53 million unit sales, a healthy distance from Compaq's 1.38 million and HP's 990,600. Gateway recorded 798,200 units to rank fourth, and IBM netted 638,200.

With second-quarter preliminary results in, industry watchers will turn their attention to the second half of the year, with speculation focusing on when the market will turn around.

"End of this year or early next year," Loverde said, predicting that the fourth quarter will see a "mild increase for the U.S."

As for a worldwide recovery, "basically, we're looking at the first half of next year," he said.

Added Gartner's Kort: "We're hopeful, but we were hopeful six months ago that the third quarter was the turning point. That got pushed back, and now we're hopeful that the first quarter of next year is going to be the turnaround."