May 3, 2001 2:55 PM PDT
Sony sails amid choppy notebook market
Sony scorched its retail notebook competitors in March, with unit shipments in the United States climbing 46.6 percent from the same period last year. The surge allowed Sony to grab the top spot in revenue from Compaq Computer. It wasn't enough to topple Compaq from the No. 1 position in unit shipments, but Sony also managed to score the top-selling model for the first time, according to new figures from NPD Intelect.
Sony's rapid climb is surprising, analysts say, noting that the company has repeatedly failed to score a hit with its notebooks. Rather than focusing on low-end or midrange models--as do Compaq and Hewlett-Packard--Sony's success comes from selling more expensive, sleeker portables.
"Sony is like the Apple of PC notebooks," IDC analyst Alan Promisel said Thursday. "They offer rich multimedia configurations with the Windows operating system that deliver a great consumer experience."
Sony also bucked the low pricing gambit of competitors, with its average retail prices about $600 above its main rivals'.
The average notebook sold at retail went for $1,684 in March, up from $1,595 in February but down from $1,795 a year earlier, according to NPD Intelect. Sony portables sold for an average of $2,090 in March, compared with $1,508 for Compaq, $1,519 for HP and $1,556 for Toshiba.
"There's clearly a different approach to hitting the market," ARS analyst Matt Sargent said. "With the first-time buyers leaving the market and not really being present, I believe the higher end of the marketplace will be the strongest segment going forward."
Sargent noted that "the $1,500 to $2,000 price band grew between the fourth quarter of 2000 and the first quarter, not the $1,000 to $1,500 band." This favors higher-end models that are "rich on features and style, something Sony seems to have over competitors."
The multimedia features of Sony notebooks "clearly appeal" to people who will spend more on a notebook, Promisel said.
The two top-selling models reveal a lot about the companies' approaches. Sony's Vaio PCG-FX120 was No. 1 by a healthy margin, according to NPD Intelect. Sony introduced the model on Feb. 7 for $1,699 with a $100 rebate but dropped the price to $1,599 on April 1 with the same cash-back offer.
The No. 2 seller in March, Compaq's Presario 12XL400, sold for $1,199 with a $100 rebate. The Presario notebook comes with a 700MHz Celeron processor, a 13.3-inch HPA display, 64MB of memory, a 10GB hard drive and a CD-ROM drive.
Promisel believes that style also helps more-costly Sony notebooks edge out competitors.
"If you factor in style, Sony really has the consumer," he said. Surprisingly, few competitors are trying to imitate Sony's success in style and features. "Most of the other consumer notebooks out there frankly have more of a corporate look. Sony has done a really good job setting itself apart from the rest of the market."
Apple, HP stumble
Overall, unit shipments of notebooks to retail fell about 5 percent year over year in March--the most recent month for which data is available--according to NPD Intelect. By contrast, Sony's sales shot up 46.6 percent. Toshiba also showed growth, with sales up 17.7 percent.
Compaq retail notebook sales nose-dived, down 20 percent year over year, and HP's sales fell 3.2 percent.
Apple Computer's retail notebook shipments also dropped in March, Sargent said. "I think they ran into some supply issues."
Apple's retail notebook shipments fell 22 percent in March compared with the same month last year. In February, sales had soared 31 percent year over year on a big boost from the Titanium PowerBook G4.
In terms of market share, Sony squeaked past Compaq to claim the top spot in revenue, with 31.2 percent market share in March, up from 18.4 percent a month earlier. Compaq dropped to 30.3 percent share from 36.3 percent in February.
Compaq easily beat Sony in unit shipments, but lost market share while doing so. The Houston-based computer maker's retail unit share sank to 33.9 percent in March from 39 percent a month earlier. During the same periods, Sony's retail portable share jumped to 25.2 percent from 14.6 percent.
Sargent observed that Sony got most of its share gain from HP, some of which can be chalked up to February supply problems.
"HP messed up, and Sony pounced on it," Sargent said. "But Sony already was gaining. If Sony keeps executing right, this may be a hard thing for HP to recover from."
HP, which until February had been a contender for the top spot in unit shipments at retail, also faces challenges from Toshiba. After dropping to fourth place from second place at retail last year, Toshiba is coming back strong.
Toshiba had 21.7 percent share in March, jumping back to No. 3.
HP grabbed the No. 4 slot as its share of unit shipments dropped to 15.2 percent from 21.5 percent in February, according to NPD Intelect. That's HP's lowest showing since June 2000.
Apple came in at No. 5 with 2.9 percent market share.
"Toshiba has kind of orchestrated a turnaround," Sargent said. "They've put together three solid months." It's an interesting development--the company's strategy is looking a lot like Sony's. "Toshiba is trying to get out of that low-end business that seemed to kill them."
Looking ahead, Sargent said he predicts that "Sony will overtake Compaq. If they keep doing what they're doing, yes. They're in a really strong position."