October 17, 2005 2:09 PM PDT

PC shipments leap past expectations

PC sales rose again in a quarter that saw Hewlett-Packard regain strength and Dell lose some of its luster.

Shipments of personal computers grew by 17.1 percent during the third quarter of 2005, according to IDC, driven by the popularity of notebooks, low-cost systems and international sales. As a result, IDC also boosted its annual forecast for shipment growth to 17.1 percent, well over the 13.3 percent growth rate the research firm predicted in August.

Research firm Gartner, meanwhile, expects shipments to grow at 17.2 percent for the year. Roughly 200 million desktops, notebooks and x86 servers will leave factories this year, according to Gartner.

The rivalry between HP and Dell took a turn as well. HP grew shipments slightly faster than rival Dell, stemming--at least for now--what had become a widening gap between No. 1 Dell and No. 2 HP.

Dell, however, grew shipments only by 17.8 percent according to IDC, and 17.6 percent according to Gartner, nearly the same as the market overall. For Dell, that's slow.

"For the first time in seven years, Dell grew the market rate," said Charles Smulders, an analyst at Gartner.

The overall picture for the PC has been somewhat consistent all year. The strength of the euro has fueled sales of consumer and business PCs across Europe, while China and other emerging nations in Asia have continued to invest heavily in PCs. Even established markets like the United States and Japan have been experiencing turgid growth. In the third quarter, PC shipments in the United States grew by 11 percent, according to IDC.

As a result, forecasters have had to up their predictions at a regular clip. In November 2004, IDC predicted that PC shipments would grow 9.4 percent this year. It upped that estimate to 13.3 percent in February and then 13.3 percent in August.

Despite price cuts, revenue is climbing as well, at least according to IDC. "Value," or revenue, will grow around 8 percent or 9 percent in 2005, higher than an earlier prediction of 4.9 percent in value. In 2003, price cuts all but erased any gains from increased shipments.

"We've had some really amazing results in the past few quarters," said Loren Loverde, an analyst at IDC.

Smulders disagreed, stating that price cuts have all but erased the gains from unit shipments. The high levels of shipments this year could also hurt sales next year, he added.

"People are replacing PCs earlier than in the past," partly because of price cuts, he said.

Although the rankings of the major computer manufacturers didn't change, HP probably has the most to crow about it. The company grew about the same rate as Dell. In the last several quarters, HP has grown at a slower rate, allowing Dell to expand its lead. In the third quarter, HP's shipments grew by 17.9 percent, slightly higher that Dell, according to IDC.

Dell saw its worldwide market share climb from 17.9 percent in the third quarter of 2004 to 18 percent in the same quarter this year, relatively slow for the company. Meanwhile, HP saw its market share go from 15.9 percent to 16 percent. In the last three months, HP has been at the forefront of discounts, offering $499 laptops and $199 desktops in limited quantities.

"It was a very strong quarter for HP," Loverde said.

Acer, meanwhile, continued at the torrid pace it has seen for more than a year. The company saw shipments grow by 53.7 percent worldwide, boosting its global market share from 3.6 percent to 4.7 percent. Acer is the fourth-largest PC maker in the world.

Apple Computer and Gateway also continued to rebound. Apple's shipments in the United States grew by 44.6 percent. It saw its U.S. market share rise from 3.3 percent to 4.3 percent, according to IDC. Apple has a 2.3 percent market share worldwide. Gateway, meanwhile, saw its U.S. market share rise from 5.2 percent to 6.4 percent through a growth rate of 35.2 percent. (Gateway sells few PCs overseas.)

The only major PC maker to see its market share slip was Lenovo. The Chinese-U.S. company saw shipments rise by 13.1 percent--taking into account the merger with IBM's PC unit--slightly less than the market as a whole. As a result, Lenovo-IBM dipped from 8 percent to 7.7 percent. Still, the company is just coming off the merger. Typically, market share dips are much larger after a merger.

7 comments

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Dell now charges for shipping
which adds about $120 to the cost.
Posted by bobby_brady (765 comments )
Reply Link Flag
Thats funny...
The computer maker that they mentioned the worldwide market is
Apple... If none of the other companies worldwide market matters,
why should Apple's?
Posted by corelogik (680 comments )
Reply Link Flag
does it matter?
These numbers are always off. The article below claims that Apple US market share was 4.7% in JULY, and also according to IDC. So it has actually gone down 0.3% whatever that means.

<a class="jive-link-external" href="http://www.macworld.co.uk/news/index.cfm?RSS&#38;NewsID=12112" target="_newWindow">http://www.macworld.co.uk/news/index.cfm?RSS&#38;NewsID=12112</a>

Worldwide market indicators are important for companies that bill themselves as international competitors. Apple has stores in Europe and Asia so article's got their worldwide numbers. Anyways, just like it has Dell's and Acer's, Gateway isn't a big player there so it doesn't have those numbers.
Posted by sanenazok (3449 comments )
Link Flag
Dell's model...
Maybe Dell should ammend their direct sales model. Most consumers like to "try before they buy" - which is exactly what you can do when you go into Best Buy and see that nice looking HP. Even if HP's Best Buy systems cost more than a Dell, the fact that you can see it, feel it, and "buy it now" probably adds to sales.

Dell should start a franchise - similar to Radio Shack - that offers purely Dell computers (and now their TV's). If you need a repair on your Dell - take it to the Dell shop. They could still use a "direct sales" pricing by fixing the price at all stores. Besides that, people would actually be paying Dell for the franchise license - there would be very little overhead costs.
Posted by (11 comments )
Reply Link Flag
Nooooo....
Dell needs to fix customer service first. It doesn't need to drive up new sales, just keep its current customers happy, which will be difficult if it continues to suck.

Go ahead, give them a call, asking for anything. Makes me think of calling AT&#38;T with a billing issue BEFORE the breakup.
Posted by sanenazok (3449 comments )
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