By Timothy Prickett Morgan
Analysts at market researcher International Data Corp say that although the PC market is undergoing its seasonal dip during the first quarter compared to the prior fourth quarter, PC unit shipments are still growing at a healthy rate. IDC expects PC unit shipments to be up 14.1% for the quarter, which closes in two weeks. That said, unit shipments are still expected to be down by 14.7% compared to the fourth quarter of 1998, when the world’s PC vendors shipped some 27.5 million machines.
In the first quarter, IDC says that PC market is being lead by strong consumer demand in the United States, Western Europe and Asia/Pacific (including Japan). Apparently, consumers are still in holiday shopping mode when it comes to sub-$1,000 PCs packed with all sorts of multimedia goodies. A resilient portable market (buoyed by new low-cost, light machines from Sony, Toshiba and others) as well as Y2K-related upgrades are also contributing to growth.
All told, the US market is expected to see the most unit growth, up 19.3% from last year’s first quarter and only down 11.8% compared to the fourth quarter. The European PC market, which was very brisk last year, is beginning to show signs of weakness, but nothing too far out of the ordinary yet. Unit PC shipments in Western Europe are expected to be up 15.1% in the first quarter, down 23.4 percent from the fourth quarter’s numbers.
Surprisingly, even Asia/Pacific outside of Japan doesn’t look too bad, with the big sectors in China, India and Australia off to a good start in 1999. The consumer markets are taking off in China and India, where PC penetration is extremely low, as PCs get cheaper. Admittedly, the Asia/Pacific region has some easy year-to-year comparisons, but nonetheless a growth rate of 14% for the first quarter is better than a sharp stick in the eye, as is a 6.7% decline compared to the fourth quarter. The Japanese market, which is waking up to cheap PCs as well as to the Apple iMac, and year-to-year and sequential unit growth are both expected to be up 6% for the quarter.
IDC has enough confidence in how the year got started to make some prognostications about how the whole year will end up. The company expects worldwide volumes to increase 14.3% over 1998 to 103.2 million units with aggregate revenues up 4.8% to $178.4 billion.
As part of its predictions for Q199 and the whole year, IDC also divulged its rankings for the fourth quarter last year. In the US market, Compaq was the number one vendor with 1.95 million units shipped and an 18.1% market share. Compaq widened its lead over Dell, which saw its market share drop to 12.8% in Q4 versus a 14.1% share in Q3 with 1.38 million units shipped; that’s a 56% growth year-to-year for Dell, but only three points growth quarter-to-quarter compared to Compaq’s expected 30 points. Gateway 2000 and IBM were neck-and-neck in the US market with 9.8 million units shipped in the fourth quarter and a 9.1% market share, followed by Hewlett-Packard with 7.8 million units and a 7.2% share.
Worldwide, Compaq is still the undisputed leader with 4.2 million units shipped and a 15.3% market share. IBM regained the number two slot from Dell, which blew by IBM in the third quarter worldwide. IBM shipped some 2.7 million units in the fourth quarter for a 9.7% share and 15% growth year-to-year and 32% growth from the third quarter. Dell came in at number three with 2.3 million units and a 8.4% market share, followed by HP with 1.6 million units (6% share) and Packard Bell-NEC with 1.2 million units (4.4% share).
If Dell maintains its current growth rates for 1999, it will become the undisputed number two vendor worldwide and within spitting distance of Compaq in the US market (at least in terms of shipments). By mid-2000, Dell could even be jockeying for position with Compaq for the number one slot, especially if IBM or Gateway decide to merge with Dell to drop the boom on Compaq. Those are big ifs, of course, and Compaq is not about to take such a threat lying down.
