Another Poor Quarter Hits PC Market

Worldwide PC shipments fell 11.6 percent in the third quarter of 2001, according to preliminary data from Gartner’s Dataquest Inc., as the slowing U.S. economy spreads to other regions.

“In the third quarter, the PC market continued to suffer from the impact of PC saturation in developed markets, and the effects of the U.S. economic downturn came heavily to bear on all PC regions,” said Charles Smulders, vice president of Gartner Dataquest’s Computing Platforms Worldwide group. “The market is experiencing a significant PC component surplus, which is creating two dynamics. First, it favors the major companies with the most efficient supply chain. Second, it is creating a resurgence in the nonbranded (white box) PCs. The oversupply situation is expected to last throughout 2002.”

Dell managed to extend its lead in both the worldwide and U.S. PC markets during the third quarter. As the other top-tier vendors experienced worldwide shipment declines ranging from 17 percent to 31 percent declines, Dell managed to grow nearly 11 percent.

There have been mixed messages from vendors on the impact the Sept. 11 attacks had on the PC market, Dataquest found. Dell said it saw a swift return to business, while Compaq estimated that the event resulted in 300,000 fewer units in the United States. Dataquest analysts said that since Compaq’s financial quarter ends in September and Dell’s quarter ends in October, Compaq would feel more of an effect.

“Compaq continued to suffer from competition relating to its supply chain,” Smulders said. “In addition to the Sept. 11 events, we believe the company was adversely affected by an at first uncertain reaction to the HP-Compaq merger announcement. HP experienced its slowest growth for worldwide shipments since the first quarter of 1997. As with Compaq, HP’s strong dependency on the U.S. home market is taking a great toll on its overall performance.”

Dataquest’s preliminary numbers indicate that every region experienced a significant slowdown in PC shipments. An anticipated double-digit decline in the Europe, Middle East and Africa region is a major factor in the worldwide result. Japan is battling the impact of the U.S. downturn and its own internal economic problems. Even Latin America, which grew by almost 50 percent in the third quarter last year, is expected to show negative growth for the third quarter.

The U.S. PC market suffered its third consecutive quarter with negative growth. PC vendors have had a difficult time getting users to upgrade their systems.

“Hardware performance has leapt ahead of most common software requirements, which provides the opportunity for users to extend their PC life cycles,” Smulders said. “The economic downturn has also reduced the professional new seat opportunity as staff reductions are made, fewer businesses are created, and people transfer companies more infrequently. The one area of hope for vendors was the back-to-school business, but early indications show that this area was also performing weakly.”


Preliminary Worldwide PC Vendor Shipment Estimates
(Third quarter 2001)
Company Q3 2001 Q3 2000 Percent
Growth
Shipments Market
Share
Shipments Market
Share
Dell 4,232 13.8% 3,818 11.0% 10.8%
Compaq 3,184 10.4% 4,623 13.4% -31.1%
IBM 2,005 6.6% 2,422 7.0% -17.2%
Hewlett-Packard 1,952 6.4% 2,588 7.5% -24.6%
NEC 1,046 3.4% 1,443 4.2% -27.5%
Others 18,167 59.4% 19,701 56.9% -7.8%
Total Market 30,586 100.0% 34,596 100.0% -11.6%
Source: Gartner Dataquest

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