Attractive price points assist continued strength in Notebook demand across EMEA in 1Q06, says IDC

LONDON, UK – APRIL 24, 2006 – In line with expectations, the EMEA PC market maintained healthy trends in the first quarter of the year with shipments expanding 15.0% year on year in 1Q06, according to preliminary data released today by IDC. The market continued to be driven by buoyant notebook demand in the consumer and SMB space, with total portable sales recording over 30% growth, while desktop shipments were also in line with expectations at 7%. Competitive pressure, declining price points, and aggressive promotions continued to assist overall demand and in particular portable adoption across the region.

"Continued erosion of laptop prices coupled with aggressive marketing campaigns have contributed to maintaining unabated demand for portable systems in the consumer and SMB market," said Karine Paoli, research director for IDC's EMEA PC Group. "Dual-core processors have received a good response and demand for wide-screen multimedia notebooks is growing, but the bulk of the market continued to be based on mainstream and low-end products with many notebooks now found at *499 or GBP399 (inc. VAT), which forces vendors to develop increasingly effective business models in order to meet market conditions while maintaining profit margins".

On the desktop front, sales maintained positive trends, but declining price points and aggressive pricing strategies also acted as a major demand stimulus.

"The business market overall remains affected by slower corporate refresh activity and continued notebook traction in the SMB space, while consumer desktop sales proved slightly disappointing in some countries," said Elsa Opitz, research manager for IDC's EMEA PC Tracker. "The attraction of notebooks plays a definite role in diverting consumers' attention but the unclear messaging around Media Centers and the announced delay of Vista may also contribute to creating 'wait and see' attitudes in the consumer space," she added.

From a regional standpoint, the buoyancy of the notebook market contributed to maintaining healthy 10% growth in Western Europe and boosted shipments to close to 12 million units in the region. Southern Europe remained strong with France, Spain, Italy or Portugal all displaying solid double-digit trends. Growth in the U.K. and Germany remained however more subdued.

Central Eastern Europe also maintained robust trends, expanding by over 19% with good performance in many countries across the region, while the Middle East and Africa regions posted another record quarter at over 38% illustrating continued expansion in the Middle East and other key countries such as Turkey or in Northern Africa.

The first quarter of the year has clearly continued to see intense vendor competition. Acer and Dell maintained pressure in EMEA, but HP posted remarkable volume growth and reinforced its leadership in the region while notebook vendor Toshiba entered the overall top 5 vendor ranking thanks to solid performance in the region. Sony and Apple also posted strong results while Asus continued to gain share in EMEA. Lenovo and NEC/Packard Bell retained key positions within the top 10 ranking, but suffered from increased competition and a difficult year-on-year comparison for Packard Bell after a strong 1Q and 4Q last year. While local vendors still hold a significant share across EMEA, they are challenged by increasingly aggressive strategies deployed by international players.

Vendor Highlights

HP recorded a strong performance in the first quarter, reinforcing its leadership in EMEA thanks to robust growth of both its desktop and notebook product lines at 15% and 50% year on year, respectively. The vendor deployed an aggressive and successful strategy to regain share – and first place – in the Western European commercial desktop market, while continuing to boost volumes and gain share in both the business and consumer notebook markets.

Dell maintained clear pressure in many countries across the region and continued to demonstrate strength in the notebook market thanks to an increased strategic focus on mobile computing as well as active marketing campaigns and aggressive price points. Slower corporate activity in the U.K. contributed to softer trends overall, but over 40% growth in the notebook space and continued expansion in CEMA assisted healthy double-digit growth overall.

Acer continued to play a key role in the notebook market with an effective product, pricing, and supply strategy still paying off, while increasing desktop volumes are also contributing to the vendor's overall performance.

Benefiting from increased brand awareness among customers, leveraging from the presence gained in the distribution channel and offering a strong value proposition, this quarter saw an acceleration of Acer's recent push in the desktop space.

Fujitsu Siemens posted a softer quarter overall, affected by a slowdown in notebook shipment growth and a difficult year-on-year comparison (close to 75% last year). The vendor recorded however an encouraging rebound in the business desktop market, outpacing overall market trends and continued to record outstanding growth both the CEE and MEA regions.

Toshiba posted outstanding 50% growth, which allowed the notebook vendor to take fifth position in the overall EMEA ranking for the first time. The Japanese vendor certainly felt the pressure of all other major vendors and from low-end product offerings but thanks to improved channel coverage and a stronger product portfolio, Toshiba demonstrated its ability to deploy an effective and successful strategy.

Shipments are branded shipments for all form factors (including desktops and notebooks) and exclude x86 servers as well as OEM sales for all vendors. Data for all vendors is reported for calendar periods.

For more information on IDC's EMEA Quarterly PC Tracker or other IDC Personal Computing research services, contact Research Director Karine Paoli, +44 (0) 20 8987 7218, or email kpaoli@idc.com. Alternatively, contact your local IDC office.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a division of IDG, the world's leading technology media, research, and events company. Additional information can be found at http://www.idc.com.

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