PC market edges towards recovery

By John G.Spooner and Michael Kanellos, CNET News, 17 July, 2003 08:34

NEWS

Despite the Sars epidemic, the war in Iraq, and economic uncertainty, the PC market grew faster than expected in the second quarter. PC shipments rose by nearly 10 percent in the April-to-June period compared with the same three months in 2002, according to research firm Gartner. Rival researcher IDC said on Wednesday that shipments were slightly less robust, climbing by 7.6 percent. Both figures were higher than the firms had expected. Gartner had forecast that PC shipments would climb 6.4 percent and IDC predicted a 4.1 percent gain. The companies count the same products, but their methods and sources differ. Overall, 33.2 million desktops, notebooks and so-called x86 servers rolled off assembly lines during the period, according to IDC. Dell successfully defended its title as the world's largest PC maker, shipping about 500,000 more computers than Hewlett-Packard during the quarter, according to both research firms. Dell also saw its market share grow faster that its competitors in the United States and globally. Worldwide, Dell's shipments increased by 28.9 percent, giving the company a 17.8 percent share of the market, according to IDC. In the United States, IDC said Dell's shipments surged by 25.6 percent, compared with 8.1 percent for the market as a whole, giving it a 31.5 percent share. HP also posted good results, with worldwide shipments increasing by 13.3 percent compared with the same period a year ago, giving it a 16.2 percent share of the market, according to IDC. As a result, HP's sales grew faster than the market as a whole. In the past three quarters, HP has grown slower than the market on a year-to-year comparison. The reversal marks the first time since its merger with Compaq was completed last year that the combined company has seen its PC business grow on an annual basis, according to HP. "The two companies are virtually neck-and-neck again, separated by just over 500,000 of the industry's more than 33 million units shipped worldwide during the quarter," Jim McDonnell, vice president of marketing for HP's Personal Systems Group, said in a prepared statement. "That's less than two days' worth of shipments over a 90-day period." As a result, HP grew faster than the market as a whole; a reversal from recent quarters. IBM, Fujitsu-Siemens and Toshiba held the third, forth and fifth spots in the worldwide rankings, according to IDC. Final US rankings were not available. Dell has been locked in a head-to-head market share battle since HP merged with Compaq in May 2002. HP has been much more aggressive on PC prices since the merger, but analysts said the company still has trouble competing with Dell in the United States, particularly in the business market. "It's a complex analysis. HP is much stronger in Europe, whereas Dell is much stronger in the United States," said Gartner analyst Charles Smulders. "HP finds it more difficult to compete against Dell's direct model in the US. But this quarter shows signs that it's done better than in previous quarters." Despite the strong quarter, analysts were reluctant to declare that the long PC slump has ended. "That's the key question," said Loren Loverde, director of IDC's PC Tracker program. "We've been expecting a longer term recovery. It's just a question of when and how fast. The market seems pretty reserved still, looking at business spending. (The latest data) might suggest a stronger recovery. We'll have to see."

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