Sony sneaking up on PC market

NEWS

Quick -- who's the fastest-growing major PC maker in the world? If you guessed Dell, you're wrong. Despite flopping in the PC market a few years ago, Japanese consumer-electronics giant Sony has finally stepped up to become one of the computer industry's big players. The company's worldwide computer shipments grew faster than those of any other major brand in 2001, according to statistics from research firm Gartner Dataquest. And this year, shipments increased 23.7 percent in the second quarter, even as the market shrank by nearly a percentage point. With these gains, Sony has marched from its No. 12 spot in worldwide market share at the end of last year to No. 8 at the end of the second quarter. "They're borrowing from several of the success strategies in the PC business," said Roger Kay, an analyst with research firm IDC. "They have a bit of the operational excellence of Dell, some of the gawk-gawk design of Apple and some of the total solutions idea from IBM -- only targeted at the home retail market." Long known for its TV sets and its Walkman portable music players -- the latter so successful, the trademarked name entered the lexicon as a generic signifier like "Kleenex" -- Sony promised to be a strong contender in the computer market. But even after a couple of years in the arena, the company limped behind more single-minded PC companies like Hewlett-Packard, IBM and Compaq. Industry experts wondered if Sony's strategy to tie its PCs to its traditional products would sink the ship before producing results. But the numbers are coming around. Shipments of Sony Vaio PCs into the US retail market are up nearly threefold in the first six months of 2002 compared with the same period in 2000, the pinnacle year for PC shipments. Compared with the same period in 2001, Sony is up almost 42 percent -- second only to Toshiba's 60 percent growth rate in US retail -- according to market tracker NPD Techworld. And in handhelds, Sony has jumped up from 1.2 percent of the retail market in October of 2000 to second in market share, to Palm, with about 22 percent of the market as of June 2002. Competitors would quickly point out that Sony's growth has been over a limited base of customers, but analysts say the company's expansion is in the right areas when it comes to generating revenue. "They have a bit of the operational excellence of Dell, some of the gawk-gawk design of Apple and some of the total solutions idea from IBM." Roger Kay, IDC analyst In the PC business, most of Sony's growth is in notebooks, which have higher margins than desktops. But even in desktops, the company has expanded from the high end into the midrange of the market. Some Sony models, in fact, are currently sold out, a rarity in a market where excess inventory has become normal. In handhelds, meanwhile, the consumer-electronics giant is also beginning to expand down into the lower end of the business, offering more models of devices. It's likely, too, that the company will maintain its strength in the high end by releasing new models with fancy new features running atop the upcoming Palm OS 5.0. Kay added that although PCs are the "glue" that connects many of Sony's technology devices, the company isn't dependent on one product line to be successful. It's also a major force in the digital camera and portable audio markets. It also helps that Sony isn't being exposed to the slowdown in corporate spending as much as some of its competitors are, IDC analyst Alan Promisel said. "Commercial IT spending is off, and while that drives most of the volume in the PC business, Sony is not in that space," Promisel said. "Dell and HP are hurt by the lack of IT spending...The consumer segment is still comparatively lively." Sony has dipped its toe into the small- and medium-sized business market, but compared to large businesses, PC sales there are relatively steady.

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