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Western Europe emerging as hot PC market

Favorable economic conditions in Western Europe are increasingly causing manufacturers look at the Old World as a focal point for sales.

PC vendors have traditionally viewed the United States and Asia as their strongest growth markets, but favorable economic conditions in Western Europe are increasingly causing manufacturers to look at the Old World as a focal point for sales.

Lower computer prices, revised tax laws, and the relative weakness of Asian economies, among other factors, will likely cause an increase in PC purchases by both European consumers and businesses over the next five year, according to a report from International Data Communications (IDC). Economic strength in England, Germany, and France (Europe's three largest markets) will also fuel demand, although growth will be tempered by sinking system prices.

Europe's growth will come to 13.9 percent this year and average 10.4 percent through 2002, IDC predicts. While lower than comparable growth rates for the United States and lower than the long-term growth rate for Japan, these numbers are stronger than European sales of the past. In fact, increased sales will boost worldwide figures and have already caused IDC to move its upwardly revise its sales projections.

"The most significant upward adjustment in unit volume was made for Western Europe, which at the end of 1997 emerged form its period of dormant growth," IDC said.

The surge in purchasing has begun already. "Europe grew by 22 percent in Q1 compared to Q1 the year before," according to Roger Kay, computer analyst with IDC. North American sales grew by 14 percent for the same period while worldwide sales growth came to 11 percent.

PC sales for Europe for 1997 as a whole grew 14.6 percent over sales in 1996.

As a result, IDC has revised its forecasts for Western Europe: Computer sales are expected to grow 13.9 percent in 1998, up from earlier projections of 10.7 percent. The compound growth rate for the years 1998-2002 has similarly been raised to 10.4 percent, up from an earlier projection of 7.7 percent growth for the period 1997-2001.

Comparatively, the U.S. will see sales increase by 15.4 percent this year and 11.4 percent on average over the five-year period. Japan, meanwhile, will see sales grow at 7.8 percent this year but at 13.8 percent over the five-year period.

Of all regions, Asia-Pacific shows the strongest contrasts. Sales in the region will grow by only 6.9 percent this year because of its economic crisis, but will expand by a chart-topping 20.8 percent average over the five-year period.

Of course, unit growth will be tempered by a much slower growth in revenues. Declining system prices mean that revenues will only grow by 6 and 7.7 percent, respectively, in Europe and the United States next year; revenues will decline in the Asian markets. And, although sales in Asia-Pacific will generate double-digit revenue growth over the five-year average, revenue growth in the United States, Europe, and Japan will all remain in single digits on average.

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