Compaq Remains Number One in Worldwide PC Market, but Dell Takes Over in the U.S. IDC Says

FRAMINGHAM, Mass., October 25, 1999 – Steady global consumer demand and the sustained rebound of the Asia/Pacific PC market drove Q3 1999 year-over-year worldwide unit growth of 25%, according to preliminary estimates released today from International Data Corporation (IDC). Worldwide shipments rose to 27.9 million units, representing sequential growth of 7.1%.

During Q3, the Asia/Pacific region continued its role as the high-growth engine among the world's PC markets. Asia/Pacific (excluding Japan) expanded 38% in shipments over the year-earlier quarter, while Japan increased at a rate of 37%. Consumer demand combined with resurgence in commercial sales spurred the strong performance in Japan. "The 'nearly free PC' model combined with strong demand in the education sector continues to fuel growth in many countries throughout Asia/Pacific," said John Brown, director of Worldwide PC Tracking research at IDC.

The United States, the epicenter of the "nearly free" PC market, again showed healthy growth with shipments of 11.7 million units on a year-over-year growth rate of 23.2%. Sequential growth remained strong at 7.8%, following unusually high demand in the second quarter. Consumer demand remains strong accentuated by the ISP-induced rebate mania that has swept across the market. Commercial shipments were only marginally slowed by Y2K corporate buyer concerns.

Internet demand and downward pricing actions in Western Europe continue to drive consumer sales, as the Y2K effect was offset by strong small and medium business demand in the commercial sector. Elsewhere, improvements in the Russian and Brazilian PC markets, combined with positive results from Canada and Middle East markets, helped contribute to a solid global growth picture.

Vendor Results

Unit gains worldwide were healthy for many major vendors in a market marked by a major squeeze on revenue, profit, and margin growth, even for many better-positioned brands. The top vendors in the United States continue to focus on improving efficiencies and creating business models and strategies devoted to creating revenue "outside the box."

In the United States, Dell shipped an impressive 2.12 million units for the quarter and opened up the narrow lead it had established over Compaq in Q2. The vendor's shipments grew 58% from last year and continues to show impressive expansion across a range of product categories and customer segments.

In its first quarter under new executive leadership, Compaq retained its long-standing position as the number one vendor worldwide. However, the vendor's worldwide growth rate lagged behind the overall market average, and the vendor's share fell to 13.8%.

While IBM checked in at number three in the worldwide rankings, it dropped to the number-five share spot in the United States where it continues to struggle to find its place in the consumer market.

Gateway continues its impressive rise in the rankings as the company moved up to the third spot in the United States on shipments of more than 1 million units for the quarter.

Hewlett-Packard continues to rely on the strength of its consumer Pavilion line and took 8.4% of the market in the United States for fourth place. Outside of the United States, the company had success in Western Europe and Asia/Pacific due to the performance of its commercial lineup.

On a worldwide basis, the combined NEC (including Japan) and Packard Bell weighed in at the number-five market share spot. The company showed limited unit growth as its U.S. operations continue to struggle with volume growth in the consumer market.

Table 1

Top 5 Vendors, U.S. PC Shipments, Third Quarter 1999 (Preliminary)

(Thousands of Units)

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| Q399 | | Q3 1999 | Market | Q3 1998 |

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| Market | Growth |

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| Rank | Vendor | Shipments | Share | Shipments |

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| Share | 1999/98 |

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