Are PC sales still slumping?

From...

By Sam Costello

(IDG) -- Though the worldwide PC market has not achieved positive year-over-year growth, the market is not declining as much as had been projected, according to new market data released last week by IDC.

For the first quarter of 2002, PC makers worldwide shipped 31.4 million PCs, down 2.7 percent from the 32.2 million shipped in the first quarter 2001, but up from the 5.4 percent year-on-year decline that had been expected for the quarter, IDC says. First-quarter shipments were down 8.9 percent over the fourth quarter of 2001, according to the Framingham, Massachusetts, company.

The research tracks shipments of desktops, portables, and Intel-based servers priced under $25,000.

U.S. shipments for the quarter, which ended March 31, were down only 0.4 percent from 2001, and the decline from the fourth-quarter holiday season of 2001 was 6.1 percent, less than the historical average of 10.4 percent, IDC says. Total shipments for the quarter were 10.6 million, down from 10.64 million in the first quarter 2001, according to IDC.

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Opposing Views

IDC's numbers are at odds with those from competitor Dataquest who last week said that PC shipments in the U.S. had risen by 2.3 percent in the first quarter of 2002 compared to the same quarter in 2001.

Either way, the growth in the worldwide market is being driven by a general economic improvement, says Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. Aggressive pricing by vendors and users replacing older PCs also played a factor, he says.

As the economy improves, IDC expects the U.S. to lead recovery, with Europe a bit more cautious, but with larger growth potential. Asia also showed strong growth in the first quarter, with both South Korea and Australia posting positive growth, IDC says.

Dell's Dominance

The chief beneficiary of the overall improvement was Dell Computer, IDC says, which shipped 4.8 million PCs worldwide for the quarter, up from 4.2 million in the same quarter 2001. Compaq Computer followed Dell with 3.4 million PCs shipped, nearly 12 percent fewer than the 3.8 million shipped in the first quarter of 2001.

Compaq's new spouse-to-be Hewlett-Packard ranked third with 2.3 million PCs shipped, down slightly from 2.4 million in 2001. IBM shipped 1.8 million PCs in the first three months of the year, down from just over 2 million at the same time last year. Fujitsu-Siemens Computers rounded out the top five vendors, shipping 1.6 million PCs, down from 1.8 million in the first quarter 2001.

Coming quarters will likely see other vendors attacking the positions held by Compaq and HP as their merger is completed, Loverde says. One vendor not listed currently who also bears watching is Sony, which is strong in the portable area, he says.

Under Pressure

Despite aggressive price-cutting, shipments of Gateway PCs dropped 30 percent year-on-year in the U.S., IDC says. Gateway is "under a lot of pressure from the other big players in the U.S. market," Loverde says. "They're trying to defend their turf."

Loverde expects that overall PC shipments will increase as the year goes on, with education buying driving the trend in the second and third quarters with business and holiday spending strong at the end of the year.

"The trend would be to ramp towards the second half [of the year]," he says. "The economic and technology drivers will support definite improvement [in the second half of the year]."