Corporate market slowdown in Western Europe stunts PC growth in Europe, Middle East, and Africa, IDC says

LONDON – APRIL 26, 2000 – As expected, the weakness of corporate sales in the first two months of the year seriously affected most PC vendors' results in EMEA. According to preliminary data released today by IDC, PC shipments in Europe, Middle East, and Africa (EMEA) increased only 11.1% in 1Q00 compared with the same period last year.

As a result of a post-Y2K investment slowdown among large businesses, PC shipments only rose 8.1% year on year in Western Europe. Despite sustained demand from small and medium businesses, commercial desktop and PC server sales declined in Western Europe.

Consumer sales, however, remained very healthy across the region, driven by Internet demand, competitive pricing, and increasing PC penetration in Southern Europe. Notebook sales grew solidly at more than 30%, fueled by strong demand and fierce competition in both the consumer and business markets.

Emerging markets continued to perform well, with the Middle East and African countries growing over 50% year on year and Eastern Europe displaying a continued recovery on the previous year.

"The decline of the corporate market in the first quarter was forecast.

Besides, IDC does not see it as a long-term trend and expects the business market to rebound in the second half of the year driven by ongoing renewal cycles and Windows 2000," said Karine Paoli, EMEA PC Tracker program manager for IDC. "Sustained growth is also expected in the consumer and notebook markets. IDC remains optimistic and maintains its forecast of 16% unit growth in EMEA for the whole year 2000."

Vendor Performance Highlights

The slowdown of corporate sales affected most market leaders and can be clearly seen in poor performance on both desktop and PC server shipments.

Toshiba's, Acer's, and Sony's results, however, reflected the healthy demand in the notebook market. The same holds true for the consumer market where consumer-oriented vendors such as Apple and Tiny Computers showed double-digit growth in the first quarter. Among the leaders, only HP managed to record substantial year-on-year growth.

Compaq maintained leadership of the EMEA PC market in the first quarter, but was seriously affected by the corporate market downturn. The leader's desktop and PC server sales clearly suffered from the decline in large business demand as well as increased competition in the SMB market.

Dell's performance in the first quarter was also clearly hindered by the slowdown in corporate demand. As a result, the direct sales leader recorded only a 11.2% unit growth year on year. Dell, however, showed sustained unit growth in France, as well as continuous gains in the notebook and PC server markets.

Hewlett-Packard's impressive growth this quarter can be compared to a soft quarter last year. Nevertheless, HP's performance in the desktop market remained solid thanks to increased competitiveness and strong consumer desktop sales. HP also continued to record strong gains in the notebook segment.

Fujitsu-Siemens' results were seriously affected by both the corporate slowdown and increasing vendor competition in Germany, its major market.

Its limited performance outside Germany, post-merger organizational problems as well as brand consolidation issues prevented the vendor from improving its position in EMEA.

IBM's sharp decline in EMEA is directly linked to the corporate market slowdown. Fierce competition in the small and medium business markets

and slow consumer sales prevented the vendor from offsetting their overall counter performance. The company, however, managed to show sustained growth in the notebook market.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends, and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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