Global PC sales rebounding

Global PC sales are coming back despite worldwide economic uncertainties, with iMac frenzy expected to double Apple's shipments.

3 min read
Global PC sales are on the rebound despite worldwide economic uncertainties, with iMac frenzy expected to double Apple's shipments while Dell continues to gain ground, according to a new report.

Woldwide sales grew 11 percent last quarter, and are expected to grow 12.2 percent for the second half of 1998, with strong U.S. and European growth outweighing Asian and Russian instability.

Most vendors have resolved the inventory gluts which led to fire-sale prices and shrinking margins in the first half of the year, according to market research firm International Data Corporation. Despite ongoing currency problems in Asian and more recently Eastern European markets, unit volumes and profit margins appear to be stabilizing.

"It's warming up, relative to what was happening in the first half of the year. There's still some negatives in Asia and Russia, but that's a relatively small amount of worldwide sales," said Bruce Stephen, an IDC analyst.

Also, while not breaking into the top five vendors yet, the most improved player of the second half of 1998 goes to Apple, according to IDC, as the momentum of the recently released iMac boosts sales figures for the second half of the year.

"IDC believes that in Quarter 3 they will have the greatest share gain of anybody--including Dell--in terms of percentages," said Roger Kay, another IDC analyst. "They could double their shipments," because of iMac demand.

Although still seventh in U.S. and worldwide sales, Kay predicts that the iMac will propel Apple into the top five in the U.S., and possible worldwide, next quarter.

"There's very little cannibalism likely--the iMac doesn't really pitch to same market as its [G3 computers], so it is all additional business for them."

Top 5 vendors, worldwide PC shipments, Q2 '98
Vendor 2Q 1998 Units % 2Q 1998 Share % 2Q 1997 Share % Unit Growth
1. Compaq* 2,818,000 14.1 13 15
2. Dell 1,815,000 9.1 5.7 71.5
3. IBM 1,572,000 7.9 8.8 -4.1
4. HP 1,240,000 6.2 5.6 19.4
5. Packard Bell NEC 896,000 4.5 5.3 -8.7
* Compaq sales include all Digital Equipment Corp. PC sales for the quarter. Source: International Data Corporation
Compaq, whose bloated inventory levels led to pricing cuts which reverberated throughout the industry, was number one worldwide and in the U.S., in terms of units shipped, Stephen said. "We think they'll get stronger, now that they've cleared up the inventory logjam which was disrupting their flow of business and led to radical pricing actions. We think they're coming back stronger."

Compaq continues to face challenges from direct seller Dell, who has managed to resist getting mired in the sub-$1,000 price wars, posting more than 70 percent growth in unit shipments, year over year. "Dell still has tremendous momentum," Stephen noted. "They're kind of in a zone unto themselves."

Hewlett-Packard also posted strong numbers, with almost 20 percent growth for the second half of 1998, fueled by momentum in the commercial market, Stephen said. The market wasn't rosy for every vendor, though. IBM slipped 4.1 percent, losing ground in the business market to Dell. Packard Bell NEC continued its downward spiral, posting negative 8 percent growth.