July 24, 2000 4:00 AM PDT

Overseas markets drive PC growth in second half

Computer buying in Asia and Latin America drove growth in the PC market in the second quarter, perhaps foreshadowing some interesting new dynamics for the market.

Computer shipments grew by 18 percent worldwide in the second quarter, driven by economic expansion in China, Japan and Latin America, according to statistics from Dataquest, a division


Gartner analyst Charles Smulders says Asia and Latin America will become more important to PC makers as the U.S. market begins to feel the impact of saturation in large accounts and the home market.

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of Gartner.

PC saturation and the seemingly gradual acceptance of Windows 2000 by corporate users, meanwhile, meant U.S. shipments grew by only 11.5 percent.

Worldwide, Compaq Computer remained the leader, but it continued to lose ground to Dell Computer, which kept the top spot in the United States. Meanwhile, Hewlett-Packard grew faster than any other large PC company, seeing shipments rise by more than 32 percent globally and 44 percent domestically. By contrast, IBM shrank in both areas.

"This year is going to be a strong one for non-U.S. markets," said Charles Smulders, an analyst at Dataquest.

Statistics from International Data Corp. were similar. PC shipments worldwide, led by Compaq, grew by 14.5 percent in the seasonally slow second quarter, while U.S. shipments, led by Dell, grew by only 7.2 percent.

"We aren't seeing the same kind of volume (in the United States) that we saw in 1999," said Anne Bui, an analyst with IDC.

A total of 30.1 million PCs, notebooks and servers were shipped in the second quarter, according to IDC, with 11.7 million of those going to the United States.

The second quarter was the fourth in a row in which world demand outstripped U.S. sales. While neither Bui nor Smulders expects radical changes in the rankings in the near future, the growing importance of the global market introduces a number of variables that bear watching.

Regional brands, for instance, will likely continue to see sales climb. The top five PC makers worldwide, for instance, saw their collective market share decline from 47.7 percent to 45.5 percent, noted Dataquest. In the United States, the trend has been going the other way, with the top five taking market share away from the rest of the market.

China is experiencing 40 percent growth in PC shipments, Smulders said, with the main brands being Legend, Great Wall and Founder.

In addition, each of the major brands is attacking foreign markets differently, which could potentially lead to advantages over time. Gateway, for instance, appears to be doing well in Britain but is not as strong elsewhere. HP and Dell, by contrast, are reasonably strong in Europe, Smulders said.

Preliminary Worldwide PC Unit Shipment Estimates (2Q 2000)
Company 2Q '00 shipments 2Q '00 market share 2Q '99 shipments 2Q '99 market share Growth
Compaq 3,980 12.6 3,762.9 14 5.8
Dell 3,346.5 10.6 2,684.8 10 24.6
HP 2,253 7.1 1,678.8 8.7 34.2
IBM 2,249 7.1 2,344 6.3 -4.1
NEC 1,394 4.4 1,278.6 4.8 9
Gateway 1,170.3 3.7 1,023.9 3.8 14.3
Others 17,230 54.5 14,025.9 52.3 22.8
Total market 31,622.8 100 26,798.9 100 18.0
Shipments in thousands of units, market share in percentages. Includes desk-based PCs, mobile PCs, and PC servers.
Source: Dataquest (July 2000)
"In Latin America, Compaq is doing extremely well," he said.

Both IDC and Dataquest found HP to be the fastest-growing company in the world. HP, which was third worldwide and third in the United States, saw shipments grow by 45.2 percent in the United States and 34.4 percent worldwide.

Worldwide, HP shipped 1.2 million computers, compared with Dell's 2.3 million. HP, however, grew shipments by 45.2 percent, compared with a growth rate of 26.6 percent for Dell.

In the world market, Dell and HP are the only two major companies growing faster than the market as a whole. In the United States, Gateway also is growing faster than the total market.

The growth rate is important. Dell, after all, was the fastest-growing company in 1999, allowing it to pass Compaq. Still, despite a strong trajectory, the situation isn't parallel. HP has seen much of its growth come in the U.S. consumer market, Smulders said. At the same time, Dell has been experiencing strong growth in the high-margin areas of notebooks, servers and workstations, he said.

Preliminary U.S. PC Vendor Unit Shipment Estimates (2Q 2000)
Company 2Q '00 shipments 2Q '00 market share 2Q '99 shipments 2Q '99 market share Growth
Dell 2,192 18.7 1,706.9 16.2 28.4
Compaq 1,705 14.5 1,785.1 17 -4.5
HP 1,220.6 10.4 847.8 8.1 44
Gateway 953.3 8.1 852.5 8.1 11.8
IBM 715 6.1 876 8.3 -18.4
Apple 520.6 4.4 468.4 4.5 11.1
Others 4,425 26.7 3,989.2 27.5 10.9
Total market 11,731.5 100 10,525.9 100 11.5
Shipments in thousands of units, market share in percentages. Includes desk-based PCs, mobile PCs, and PC servers.
Source: Dataquest (July 2000)
A more ominous competitive challenge for Dell may come from small desktops such as Compaq's iPaq and HP's eVectra. These machines, which start at $499, are being pitched to corporate America almost as mass-produced, disposable PCs. The challenge for Dell lies in its continuing promotion of technology and performance over simplicity, he said.

If corporate buyers take to the small desktops, it could "reset the computer agenda in the PC market," Smulders added.

 

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