IDC Forecasts “Warming” Worldwide PC Demand In Second Half Of 1998

FRAMINGHAM, Mass., Sept. 9, 1998 — Unit volume in the worldwide PC market this quarter is expected to grow year-on-year 11 percent, according to data released today by International Data Corporation (IDC). This mixed, but modest growth reflects a "warming" of a global market, which remains dampened by economic problems in the Asia/Pacific region and Russia.

IDC now estimates that vendor shipments* will grow 12.2 percent in the second half of 1998 with total year growth at eleven percent. Global volume increased 9.6 percent during the first half of the year.

"The inventory problems that plagued the first half of the year have been largely erased and we expect the market to perform better in the next six months with improved demand for low-cost and portable PCs," said Bruce Stephen, IDC group vice president of worldwide PC research. "However, while some market signals are better, IDC is still concerned about the spread of global economic problems and the attendant problems on PC demand."

Western Europe continues to be a market bright spot with unit growth of 16 percent expected this quarter, driven by heightened interest in the Internet, low-cost PCs as well as greater focus on the region by major global brands,

U.S. growth this quarter is pegged at 14 percent based on the continued strength of the low-cost PC market, healthy consumer demand and a more vibrant portable computer segment.

As in the first two quarters of 1998, Asia/Pacific (excluding Japan) is forecast to post negative (-3 percent) growth this quarter The region's economic woes have stifled PC demand in many areas, and the region is expected to show negative growth of nearly two percent for the entire year.

The gloomy growth picture in Japan is expected to improve a bit this quarter with unit volume up about two percent over the prior year, after Q2 unit shipments dropped 14 percent. For the total year, unit volume in Japan is expected to decline four percent.

VENDORS

IDC thinks the shift toward lower prices and more efficient business models favors the largest vendors, who have broader product lines and geographical scope.

IDC believes the greatest growth rates in Q3 unit shipments will fall to Apple, which is posting a strong product lineup headed up by the hot-selling iMac. Dell Computer is also enjoying impressive growth across the spectrum of product and customer segments as well as many geographies. Dell's chief rival, Compaq, should also turn in a much better quarter as the company returns to higher factory shipment growth, especially in commercial desktops. Compaq's consumer business also looks very strong. Share gains will likely be enjoyed by Hewlett-Packard, Gateway, and Toshiba (based on strong U.S. portable shipments).

Table 1

Top 5 Vendors, Worldwide PC Shipments, Q2 1998

(Thousands of Units)

Q298 Q298 Q297 Q297 Growth

Vendor Units % Share Units % Share 98/97

Compaq 2,818 14.1% 2,446 13% 15%

Dell 1,815 9.1% 1,059 5.7% 71.5%

IBM 1,572 7.9% 1,639 8.8% -4.1%

Hewlett-Packard 1,240 6.2% 1,038 5.6% 19.4%

Packard Bell NEC 896 4.5% 982 5.3% -8.7%

Top 5 8,342 41.7% 7,164 38.6% 16.4%

Others 11,659 58.3% 11,397 61.4% 2.3%

Total 20,001 100.0% 18,561 100.0% 7.8%

*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

Data for Packard Bell NEC includes shipments for Packard Bell, ZDS, and NEC outside of Japan and China

Compaq sales include all Digital Equipment Corp. PC sales for the quarter

Source: International Data Corporation, 9/98

Table 2

USA Top 5 Vendor Rankings

(Thousands of Units)

Q298 Q298 Q297 Q297 Growth

Vendor Units % Share Units % Share 98/97

Compaq 1,157 14.4% 1,039 14.3% 11.3%

Dell 1,143 14.3% 666 9.2% 71.7%

Hewlett-Packard 628 7.8% 473 6.5% 32.7%

Gateway 623 7.8% 470 6.5% 32.6%

Packard Bell NEC 613 7.7% 685 9.4% -10.5%