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Toshiba losing notebook lead

Compaq, IBM, and others have improved their lines and distribution--and, research shows, their market share has grown as a result.

The U.S. notebook PC market is getting a face-lift.

Toshiba's hold on the number-one slot, once thought unassailable, is being challenged by a host of American manufacturers, according to a major marketing research firm.

In the second quarter of this year, Toshiba lost market share in the U.S. as Compaq (CPQ), IBM (IBM), and Dell Computer (DELL) continue to consistently gain ground, apparently at Toshiba?s expense.

Preliminary International Data Corp. (IDC) figures for notebook PC shipments in the U.S. market in the second quarter of 1997 show, on a year-to-year basis, Toshiba falling to a 17.8 percent market share from 23.7 percent in 1996. In contrast, IBM's share grew and is now within four points of the market-leader at 14 percent, while Compaq jumped four points and Dell, for the first time, moved into the top five.

Gateway 2000 (GTW) also made it into the top ten for the first time, while Apple Computer (AAPL) fell out of it, according to IDC.

"Last year, Dell was small potatoes, IBM?s midrange lineup wasn?t there, and Compaq was struggling. But it?s a much tougher competitive environment for [Toshiba] now," said Bruce Stephen, a vice president of research at IDC.

"Toshiba had a lot more running room than they have now," he added.

But Toshiba says this is a blip more than anything. "We had a big product launch in June. We're seeing strong sales of new products. We're in a transition from old to new [lines]," said a Toshiba spokesperson. She added that on a half-year basis, Toshiba continues to hold 20 percent of the market.

Nevertheless, Toshiba faces problems with the sales of older models. Toshiba "overstuffed" the sales channel in the first quarter and wasn?t able to sell off many models, according to Randy Giusto, also an analyst at IDC. Toshiba's precipitous drop is even more apparent when this year's second quarter is compared to the first: earlier, Toshiba was at 24.4 percent, now it's at 17.8 percent.

But that?s not all that?s happening. Top vendors such as IBM and Compaq now have much fuller lineups and are being aggressive in the retail channels, where they were virtually nonexistent before.

The new, lower-end IBM ThinkPad 380 line is now in many retail outlets, said Giusto. IBM's 560 line of ultra-portable notebooks also continues to be popular for business users. Compaq, for its part, now has a wide range of notebooks for retail consumers under the Presario brand name.

And in the long term, one of the biggest trends to impact the market will be the emergence of heretofore smaller notebook vendors such as Dell and Gateway.

"Dell is doing extremely well," said Stephen. Mirroring its success on the desktop and in servers, on a year-to-year basis Dell shipments jumped 77 percent. Gateway shipments zoomed up 103 percent.

All vendors will be bringing out new models when Intel announces new Pentium processors for notebook PCs next month. The newest processors will run at 200 MHz and 233 MHz and appear in many notebooks with large 13.3-inch screens.