Dell Takes Lead in Worldwide PC Shipments as Market Slump Deepens, According to IDC

FRAMINGHAM, MA – APRIL 20, 2001 – The worldwide PC market grew only 2.8% year on year in the first quarter of 2001 with a market drop of 9.5% in the United States, according to preliminary IDC data. Worldwide shipments reached 31.6 million units amid the market slowdown.

 

"After a cold holiday season in 2000, the U.S. consumer market hardened into a deep freeze going into the first quarter, adding to normal seasonal effects," said Roger Kay, research manager covering PC hardware at IDC. "Those companies with greatest exposure to the U.S. consumer desktop business were most punished by the arctic market winds."

In this environment, Dell, with its heavier commercial mix and garroting pricing strategies, pulled ahead of its rivals. IBM, newly trim and emphasizing its enterprise customer base, also did reasonably well.

The U.S. PC market is by no means off the ice floe, however. The mood among consumers bled into the commercial segment, as buyers turned cautious in the face of signs of deterioration, including capital spending cutbacks, layoffs, and a negative snowballing of drying up investment across all sectors of the economy. While some capital spending continued, reasons to buy in the commercial segments were few and weak.

"The slowdown still appears focused on the U.S. market, although other regions are by no means in the clear," said Loren Loverde, director of IDC’s Worldwide Quarterly PC Tracker. "Businesses and consumers alike are holding back."

Business spending sustained single-digit growth in Europe during the quarter, but has not revived the market to double-digit rates. Consumer spending also remained weak. Although business demand in Europe is building somewhat, this trend will not be enough to reinvigorate the market for another couple of quarters.

The Asian markets have also slowed from the rapid growth they experienced during the past couple of years, with Japan slightly behind expectations and Asia Pacific (excluding Japan) slightly better.

In addition, reasons to buy are few and far between, as almost 90% of systems sold in the last three years are Pentium II or better.

Vendors

In the United States, Dell distanced itself from all its major rivals. A combination of relentless pricing cutting and a segment focus somewhat shielded from the swooning consumer market enabled the company to gain two full points of share sequentially and grow its PC shipments 28% year on year. Only IBM, which also benefited from a commercial focus, was able to turn in even a positive year-on-year performance, but, on a U.S. basis, the company nonetheless lost share sequentially. Compaq, now a distant number two, lost more than a half a point of share sequentially, as organizational consolidation, product streamlining, and redoubled branding efforts failed to reverse the negative trend. HP, which a quarter ago moved ahead smartly based on its performance in the consumer market, turned in a disastrous quarter, losing 2.4 points of share sequentially and experiencing a shipment decline year on year of 24%. Gateway, saddled with fixed costs and a heavy U.S. consumer focus, also lost share.

Worldwide, Dell took the lead in total shipments by a combination of a quick reaction to changing conditions in the U.S. market and solid performance abroad. The company’s direct model and aggressive pricing helped it gain over a point in worldwide market share. Compaq was aided by its breadth outside the United States, although its year-on-year decline of 20% in the United States dragged down overall performance. Compaq continues to adjust its business model around the world even as Dell continues executing. HP did well in Western Europe, but this positive performance was counterbalanced by its exposure to the U.S. market, particularly consumer. IBM’s decision to leave the retail market in the United States and Western Europe, which seemed a woeful choice a year ago, actually insulated the company from the worst of the U.S. downturn. Also, the company’s international diversification, greater than any of its competitors, helped buoy unit shipments. Fujitsu-Siemens, benefiting from its strong presence in Western Europe, was able to turn in a positive performance year on year.

Table 1

Top 5 Vendors, U.S. PC Shipments, First Quarter 2001 (Preliminary)

(Thousands of Units)

Q1 2001 Q1 2001 Market Q1 2000 Market Growth

Rank Vendor Shipments Share Shipments Share 2001/2000

1 Dell 2,535 24.2% 1,980 17.1% 28.0%

2 Compaq 1,509 14.4% 1,890 16.3% -20.2%

3 Hewlett-Packard 1,075 10.2% 1,415 12.2% -24.0%

4 Gateway 924 8.8% 1,038 9.0% -11.0%

5 IBM 562 5.4% 471 4.1% 19.3%

Others 3,886 37.0% 4,800 41.4% -19.0%

All Vendors 10,491 100.0% 11,594 100.0% -9.5%

· Vendor shipments are branded shipments and exclude OEM sales for all vendors and represent shipments to distribution channels or direct to end users.

· Data for all vendors are reported for calendar periods.

Source: IDC, April 2001

Table 2

Top 5 Vendors, Worldwide PC Shipments, First Quarter 2001 (Preliminary)

(Thousands of Units)

Q1 2001 Q1 2001 Market Q1 2000 Market Growth

Rank Vendor Shipments Share Shipments Share 2001/2000

1 Dell 4,147 13.1% 3,190 10.4% 30.0%

2 Compaq 3,768 11.9% 3,952 12.8% -4.7%

3 Hewlett-Packard 2,380 7.5% 2,488 8.1% -4.4%

4 IBM 2,004 6.3% 1,876 6.1% 6.8%

5 Fujitsu Siemens 1,773 5.6% 1,788 5.8% -0.8%

Others 17,562 55.5% 17,486 56.8% 0.4%

All Vendors 31,633 100.0% 30,781 100.0% 2.8%