October 23, 2000 9:00 AM PDT
PC shipments grow 16 percent worldwide
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But the direction of the market, as it has been for the entire year, is uncertain, with signs that the fourth quarter could be slow.
Worldwide PC shipments grew by 15.2 percent in the third quarter, according to research firm Gartner Dataquest. Competitor IDC said that shipments grew by 18.3 percent. Averaging the two together, shipment growth came in between 16 and 17 percent, according to a report from Merrill Lynch analyst Steve Fortuna.
As in the second quarter, overseas markets, particularly Asia, outpaced U.S. demand. In the United States, PC shipments grew by 12.2 percent, according to Dataquest, while IDC pegged it at 9.4 percent. Europe was slower than average, too.
Hewlett-Packard once again was the fastest-growing major company, with shipments growing 38.6 percent worldwide, according to Dataquest, followed by Dell Computer with 21.7 percent.
Apple grew its U.S. market share to 4.4 percent on 25.2 percent growth, while IBM's share shrank to 5.6 percent because of an 18.8 percent reduction in shipments.
The shipment figures provided fodder for both pessimists and optimists. On the positive side, the PC market is still growing. More than 33 million desktops, notebooks and PC servers left factory doors.
On the other hand, it's not growing as fast as it once did in key markets. From 1994 to 1999, the PC market in the United States on average grew by 20 percent in the third quarter, according to IDC analyst Roger Kay. Then again, the third quarter of 1999 saw shipments grow by a better-than-average 22.4 percent, a factor that typically attenuates shipment growth in the succeeding year.
The fourth quarter is also in question because of growing inventories, Dataquest said.
"Despite the midteen growth in the worldwide PC market, this increase in the market could be misleading," wrote Charles Smulders, an analyst with the company. "We suspect these relatively strong numbers in the third quarter reflect a buildup of channel inventory. The fourth quarter could show slower unit growth."
In a conference call with analysts last week, Intel CFO Andy Bryant said revenue may be slower than normal in the fourth quarter.
Nonetheless, the market may enjoy an unusual seasonal bounce in the first quarter of 2001 with a reawakening of corporate demand, Smulders predicted. In the United States, first-quarter shipments could rise by 25 percent, while European business demand could return.
Typically, demand slows down in the fourth quarter, but the PC market hasn't displayed its usual characteristics for a while.
In the United States and Japan, the consumer market was once again larger than the corporate market, an unusual trend that began in the fourth quarter last year, noted IDC's Kay. In the rest of the world, the consumer market was smaller but grew at a faster rate than the corporate market. A substantial number of HP's PCs go to the consumer market.
"Consumer is still on a pretty good roll," Kay said.
Partly fueling the trend is the fact that businesses already own plenty of computers. "It's saturation. In the U.S. it's about replacement and extension and not virgin territory," Kay added. "The worldwide numbers are substantially better."
All's not bleak for PC market
Steve Koenig, analyst, PC Data
Except for HP, the rest of the top five manufacturers grew slower than the "other" PC makers worldwide, which grew collectively by 20.4 percent.
By contrast, the "other" category in the United States grew by only 0.5 percent. IBM was the only major manufacturer to grow more slowly.