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Compaq retains PC market share lead

Despite well-publicized difficulties, the Houston-based PC maker gains market share in the United States and worldwide during the second quarter, fending off Dell.

Something must be going well at Compaq.

Despite oft-publicized difficulties, the Houston-based PC maker gained market share in the United States and worldwide during the second quarter, fending off Dell to retain the industry's top spot, according to two new studies.

But while Compaq and Dell reported strong quarters, the company that logged the most growth turned out to be IBM. Big Blue saw a 71-percent gain in the United States in terms of computers shipped, vaulting past Gateway and Hewlett-Packard to take third place in domestic market share, according to International Data Corporation.

Declining prices seemed to help the industry as a whole, as the number of PCs shipped jumped approximately 27 percent worldwide and 35 percent in the United States in year-to-year comparisons.

Some 25.6 million units shipped in three months from April to June, IDC reported. "The potent combination of the super-low-cost segment with the subsidized or 'nearly free' PC model, rebates, and Internet service provider bundling catalyzed market expansion," IDC said.

Tempering the perception of strong growth, however, is the fact that 1998's surplus of PCs depressed second-quarter sales a year ago. Unit sales in the second quarter of this year were actually down 2.5 percent from the first quarter, a traditional seasonal phenomenon.

Nor is Compaq's new CEO, Michael Capellas, likely to be complacent about Compaq's lead. Globally, the company claimed 13.8 percent of the PC market, compared to 10.2 percent for Dell, according to Dataquest. The 3.6 percent margin is slimmer than the 5.5 percent lead Compaq enjoyed in the same quarter in 1998.

In the United States, Compaq kept a hair ahead of Dell, helped in part by a strong showing in the consumer market. The companies had 16.8 percent and 16.4 percent of the market, respectively, Dataquest said. Both IDC and Dataquest track the number of PCs shipped by the manufacturers, not the number of machines actually sold to customers.

The Texas twosome remain well ahead of their rivals. The nearest competitor has about half the market share in the United States.

Still, IBM grew prodigiously in the U.S. market; worldwide only Dell's 50-percent gain topped Big Blue's 47-percent increase, Dataquest said.

IBM's gains came largely from portables and business desktops, IDC said.

The U.S. and world markets also continued to consolidate, with the big-name makers taking a growing share. Globally, worldwide market share of companies outside the top five dropped from 56.4 percent to 53.4 percent, IDC said, while in the United States it dipped from 49.3 percent to 43.5 percent.

Four of the top five PC companies gained market share in the second quarter. In the States, Compaq, Dell and IBM all gained, while Gateway and HP stayed level.

Packard Bell/NEC, once a dominant company in the home PC market, slipped farther downhill. Globally, its share dropped from 6.5 percent to 5.3 percent, the only company in the top five to lose market share.

"The company showed limited unit growth as its U.S. operations continue to struggle with volume growth in the consumer market," IDC said.

In Japan, sales of home computers were strong, driving that region to the highest yearly growth rate, IDC said. In Western Europe, healthy business sales offset weak consumer demand.