June 16, 1997 1:25 PM PDT

Compaq makes gains in notebooks

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Compaq Computer (CPQ) has made gains against long-time market leader Toshiba.

Compaq garnered a 25.6 percent market share in the dealer and retail channels for the first quarter of this year, according to a report from Computer Intelligence, a 120 percent increase over its 14.7 percent share reported a year ago. The increase pushed Compaq from third place in the market to second, over IBM (IBM). Compaq appeared to make the largest gains in the computer dealer channel, the traditional conduit to the business market, where it emerged as the market leader with a 30.6 percent share, up from a 22.9 percent.

While still the overall market leader, Toshiba saw its market share decline to 33.3 percent from 37.8 percent in the same channels for the same quarter a year ago, according to the study. IBM's market share declined slightly from 21.2 percent to 20.8 percent.

Toshiba has also been losing ground in surveys conducted by International Data Corporation (IDC). Toshiba held a 26.1 percent market share in the third quarter of 1996 while a preliminary study shows that the Japanese manufacturer now has 24.4 percent. The discrepancy in figures from IDC and Computer Intelligence comes from differing methodologies.

Jeffrey Friederics, vice president of worldwide marketing for Toshiba, termed the numbers a cyclical glitch brought on in part by a shortage of 11.3-inch displays last quarter. "Volume-wise, we are up from the fourth quarter," he said.

The battle for market share dominance is expected to escalate over the summer as both companies recently updated their notebook lines, said Matt Sargent, an industry analyst with Computer Intelligence.

Oddly enough, Compaq's increase came as analysts and customers were reporting quality problems with its Armada and LTE notebook lines. Leslie Firing, a vice president at Gartner Group issued a "do not buy" rating on the Armada 4100 and a "buy with caution" designation on the LTE 5000s last month for various quality problems.

Houston-based Compaq was not alone, however, in drawing dismal quality ratings. During this same period, for instance, Toshiba had been suffering from a shortage of spare parts.

In fact, Firing said, problems have increased throughout the entire market in the last year because manufacturers have adopted a policy of rushing out products to match developments in microprocessors. Although firms can generally produce new desktop lines to make use of new chips, notebooks usually take longer to develop because of their smaller size.

"Everybody is having problems. There is not a single vendor that is immune," she said.

 

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