PC Shipments Slow in U.S., Grow Overseas

FRAMINGHAM (07/25/2000) - While PC sales in the U.S slowed during the second quarter, overseas shipments went up, and new offerings may spur growth at home by year's end, according to two reports on PC sales.

Saturation of PCs in the U.S. market and a bevy of free-computer deals in Latin America were some of the reasons behind the numbers, said Charles Smulders, principal analyst at Dataquest in San Jose.

Smulders helped compile a report released Monday from Dataquest, a division of Gartner Group Inc., that shows global PC shipment growth was 18 percent.

International Data Corp. (IDC) in Framingham, Mass., reported 14.5 percent growth worldwide.

Worldwide, PC makers shipped 30.1 million desktop and mobile PCs and PC servers in the quarter, said IDC, while Dataquest set the figure at 31.5 million.

The researchers reported somewhat different figures for U.S. shipment growth.

Dataquest pegged U.S. growth of PC shipments at 11.5 percent in the second quarter of this year, compared with the same quarter last year, and IDC reported 7.2 percent growth.

The U.S. accounts for 37 percent of the world PC market, according to Dataquest, which noted that saturation in the U.S. market will be a continuing challenge to future growth. IDC's study echoed the sentiment. "The U.S. consumer market had been on fire for the last year and a half and is showing signs of slowing down," said IDC analyst Bruce Stephen.

However, by the end of the year, the new class of small-form factor PCs, such as Compaq Computer Corp.'s iPaq and Hewlett Packard Co.'s e-Vectra, may boost sales and motivate enterprise customers to update their computer bases, Smulders said. These products weigh less than 11 lb. with no other add-ons.

"They are good enough for the majority of the people in an organization," Smulders said, and combined with the arrival of Windows 2000, a low entry price and low cost of ownership, small-form factor PCs should encourage companies to update their hardware by the end of the fourth quarter, Smulders said.

As for overseas, he said, the offering of free PCs in Argentina and other Latin American countries has helped boost the PC market there, as similar, state-sponsored programs did in Asia last year.

"There's been a fairly consistent pattern in place for the last year. ... "[In Asia], they had a severe downturn a couple of years ago, but they've come out of it rather robustly." Stephen said. "This growth in Asia is driven by consumer demand."

Compaq retained the top spot for global selling. Both reports said Compaq shipped almost 4 million PCs, for about 13 percent of the market. Compaq's unit shipments grew about 6 percent from the same quarter last year, compared to the shipment growth of No. 2 Dell Computer Corp., which Dataquest set at 24.6 percent and IDC put at 22.3 percent. Dell shipped 3.4 million units, according to Dataquest, and slightly less based on IDC figures. Third-ranked HP registered 34 percent growth, with 2.2 million units shipped.

IBM continued to rank fourth, with about 7 percent of the market, but experienced a 4.1 percent decline in shipments, evidence of its withdrawal from the U.S. retail channel, according to both market researchers. IBM shipped almost 2.25 million units, according to both research companies.

George A. Chidi Jr. of the IDG News Service contributed to this report.

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