The alarm bells are sounding at Compaq over its PC market share, as the latest figures suggest cracks are appearing in the long-term market leader's armour.
IT channel researcher Inform has reported Compaq's indirect (channel) PC shipments dropped by 6.8 per cent, resulting in its market share slumping 1.9 per cent to 16.9 per cent from 18.8 per cent in May.
Inform senior research analyst Phil Burnham cautioned against making too much of what could be a blip, but added "it's a hell of a blip". Burnham also pointed out that June was when the so-called zero dollar PCs and other Internet bundles started to take hold.
"The indirect PC market grew 4 per cent from May to June, and by comparison with Compaq, HP and Acer had tremendous months, as did Optima and Edge," Burnham said. According to Burnham, the major driving factor in the market was the bundled Internet sales, which generated strong demand in low-end products, a segment in which Compaq is not strong.
Suggesting that the Australian corporate market may be reacting to upheavals in the US, Burnham added: "While the biggest drop in Compaq's comparative PC sales performance in June was in the corporate reseller channel, it will be very interesting to see what July produced, and I expect some recovery in its share."
IDC Australia market analyst Logan Ringland did not agree that the Australia and New Zealand market has been affected by the vendor's problems in the US, however the overall quarter-on-quarter PC figures don't paint a rosy picture for Compaq.
According to Ringland, April to June '99 was a record quarter in Australia, with 541,000 units being shipped, a 19.5 per cent increase over the March quarter and 16.5 per cent above the previous best result (set in Q2 98), yet Compaq barely maintained its existing market share.
Quarter on quarter, HP, IBM and Dell made huge jumps, while Compaq's results were consistent with the market growth, maintaining a 16 per cent market share. HP leapt from 6.5 to 8.3 per cent market share with a 64 per cent increase in unit sales. Ringland attributed much of HP's performance to the so-called "chameleon PCs", with its Internet-bundled 4411 and 6425 Pavilion sales through retailers David Jones and Grace Brothers.
Meanwhile, Compaq managing director Ian Penman has responded to growing industry concern over the company's new retail strategy and the recent loss of support from major retailers.
Harvey Norman (see front page story) will no longer carry Compaq PCs and other industry reports suggest Harris Technology and Coles Myer are seriously evaluating their relationship with the vendor.
Penman told media at a briefing held in Adelaide last week that the retail strategy must be put in perspective.
Compaq's Australian sales for 1998 were $1.5 billion and its retail sales accounted for less than 10 per cent, he said.
Harvey Norman represented under half of that retail figure, which Penman said represents less than 5 per cent of Compaq's sales. In addition, he claims Compaq's relationships with other retailers are healthy.
In response to industry reports Harris Technology is planning to "dump" Compaq, Penman said the Coles Myer subsidiary has simply cut two Compaq products from its line-up - the Prosignia, which it did not sell anyway, and the Presario, of which it sold very few.
Harris Technology has retained the DeskPro and Armada range for its enterprise customers, Penman claimed.
Penman also confirmed last week plans to have the first eight Compaq-branded stores open by the end of the year, with five in Melbourne and three in Brisbane.
He said each store would be Compaq-owned and operated, with the intention of using them as the models on which to build a franchise.
"I want to be playing with Compaq's money, and make sure we get it [the model] right, and then work to the franchise model," he said.
1999 PC SALES
(000s of units)
IBM Q1: 46 Q2 :61
Hewlett-Packard Q1: 29 Q2: 45
Dell Q1: 30 Q2: 36
Compaq Q1: 72 Q2: 86
Overall Q1: 447 Q2: 541
(Source: IDC Australia)