Despite Slow Start in Q1, EMEA PC Sales Will Grow 16.4% in 2000, IDC Forecasts

LONDON, MARCH 15, 2000 — Although PC sales got off to a slow start this year in the Europe, Middle East, and Africa (EMEA) region, IDC remains optimistic for the whole year 2000. The Internet will continue to drive consumer sales, and Windows 2000 should help stimulate business renewals in the second half of the year. PC shipments are expected to grow 16.4%, and more than 38.8 million PCs will be shipped in the region this year. The market, however, will remain constrained by fierce competition and sharp price decreases on all form factors, affecting value growth.

The first quarter will be affected by slow business investments after the Y2K transition. Though business markets are predicted to rebound in the second quarter, IDC does not expect Windows 2000 to have a strong impact on the market before the second half of the year.

Consumer sales will continue to drive the overall market in unit terms, fueled by Internet demand and fierce price competition in the retail channel.

"The intense competition in the consumer market and the increasing share of the new Internet channel will contribute to increase the pressure on margins," said Karine Paoli, EMEA PC Tracker program manager for IDC. "The challenge for PC vendors is more than ever to improve their business model, increase efficiencies, and create outside-the-box revenues in order to meet these new market requirements."

Affected by a slow demand in the corporate market in the first two months of the year due to post-Y2K investments and a wait-and-see approach to Windows 2000, PC sales in Western Europe should experience limited growth in the first quarter of 2000, estimated at just over 10%. Slow business sales should be offset – even partially – by sustained demand in the SMB market and solid growth of consumer sales.

Business investments are expected to rebound by the end of the second quarter and will be stimulated by Windows 2000 upgrades in the second half of the year. The small business market is expected to remain the most dynamic segment although sustained demand is also expected from medium-sized companies. Corporate investments should also remain solid and are expected to rebound by 2Q00.

Consumer sales will remain very healthy across the region and will continue to drive the European PC market in unit terms. The nearly free PC initiatives and the Internet boom will continue to fuel demand for PCs in most European countries. IDC expects consumer sales to increase 20.7% in 2000.

Consumer markets will remain particularly strong in France, Germany, and the United Kingdom, where continued aggressive pricing in the retail channel, brand competition, and increased Internet access demand will continue to stimulate purchases and renewals. Notebook sales, which took off in 4Q99, will also continue to record high levels of growth throughout 2000.

The notebook market should experience another year of strong growth driven by both business and consumer demand. Increased price/performance/benefit ratio, as well as an increasingly competitive environment, will continue to boost the portable market in Europe.

PC server shipments should also remain solid, driven by sustained demand in the small and medium business markets as well as the new business created through ISPs, ASPs, and other Internet-related markets. Sharp price declines, however, are expected and will clearly affect the outlook in revenues — and margins for both vendors as well as the channel.

East Central Europe, which was under the negative influence of a dramatic decline in sales in Russia during the last half of 1998 and the first half of 1999, rebounded in 2H99 as the Russian market stabilized. This dynamic is expected to bring overall growth in the region to a positive 12.7% for 2000. The outlook for the Middle East and Africa region also remains very positive, as IDC forecasts a 22.7% unit growth in the region.

Top 5 Vendors, Europe, Middle East, and Africa (EMEA) PC Shipments, Full Year 1999 (000s)

Vendor FY 1998 Units Unit Share FY 1999 Units Unit Share 1998-1999 Growth

Compaq 4,787 16.8% 5,469 16.4% 14.3%

Fujitsu Siemens Computers 2,779 9.7% 3,684 11.0% 32.6%

Dell 2,118 7.4% 2,912 8.7% 37.5%

IBM 2,426 8.5% 2,800 8.4% 15.4%

Hewlett-Packard 1,838 6.4% 2,267 6.8% 23.4%

Others 14,618 51.2% 16,218 48.6% 10.9%

Total 28,566 100% 33,352 100% 16.8%

Source: IDC, Final Results, February 2000

Shipments are branded shipments and exclude OEM sales for all vendors.

Data for all vendors are reported for calendar periods.

(1)Data for Compaq includes Compaq, Digital Equipment and Tandem products.

(2)Data for Fujitsu Siemens includes shipments for Fujitsu and Siemens.

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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