IDC Results Show Solid 1st Quarter PC Growth Consumer Demand Offsets Sluggish Commercial Market

FRAMINGHAM, MA – APRIL 24, 2000 – Worldwide 1Q 2000 PC market volume expanded 20% year over year, according to preliminary estimates released today by IDC . Healthy consumer demand and continued expansion of the Asian markets propelled worldwide volume to 30.4 million units, which represents a sequential decline of 9.3%.

The 1Q worldwide growth story again centers on major demand for PCs in the Asia/Pacific (excluding Japan) and Japanese markets, which registered year-on- year growth of 36% and 35%, respectively. As in other parts of the world, consumer sales and rapidly expanding interest in the Internet drove PC demand.

"The global consumer appetite for PCs helped offset a Y2K-induced slowdown in commercial market interest in PCs," said Bruce Stephen, IDC group vice president of Personal Systems research. "Looking ahead, IDC believes that commercial market demand has started to stabilize in most major regions of the world, and purchase patterns should return to more normal rates during the second half of the year."

In the U.S. market, which totaled 11.6 million on year-on-year growth of 17%, consumer PC interest also remained high. The consumer-heavy market, which declined 7% on a sequential basis, sparked changes in the vendor share rankings, with eMachines replacing IBM in the number-five spot. Consumer PC demand spanned a range of price points from value to moderately priced models. Vendors heavily focused on commercial market sales were hit by a slowdown, especially early in the quarter.

"We continued to see sustained demand for PCs from consumers in the first quarter, despite heavy buying during the 1999 holiday buying season," said Gabrielle Griffith, IDC research analyst, IDC U.S. Quarterly PC Tracker. "We are still on an unprecedented, long-running consumer demand cycle for PCs." Elsewhere, Internet demand and lower PC prices in Western Europe continue to drive consumer sales, while strong PC interest from small and medium businesses also fueled volume expansion. Global increases in PC shipments were also led by more than 50% growth in the Middle East, coupled with positive results from Canada and Eastern Europe.

Vendor Results

The unit growth picture for major worldwide vendors was mixed. However, PC vendor strategy continues to be focused on improving financial results, creating efficiency improvements as well as building programs, practices, and partnerships outside the box. With the consolidation of major vendors in U.S. retail channels, consumer-focused vendors such as Hewlett-Packard showed major increases in volume. HP strengthened its number-three share spot in the United States and broke its deadlock with IBM for the number-three position worldwide. The consolidation in U.S. retail also favored eMachines, which shipped over 500,000 units and moved from the number-seven share rank in 4Q99 to number five in 1Q00.

In the United States, Dell retained the number-one position it took from Compaq in 4Q99. While the company grew well ahead of the overall U.S. market average, its results were plagued by sluggishness in the corporate PC sector. Dell remains ranked number two behind Compaq in worldwide unit market share.

While Compaq's consumer sales were impressive in 1Q, the company's overall growth was also dampened by weakness in business PC purchases. Compaq maintained its stronghold on the number-one position worldwide; Gateway also felt the pinch of the slow commercial start but managed to hold onto the fourth position in the United States. Relying on its consumer business, the company posted a modest 13% growth over last year.

IBM's unit growth was severely impacted in the United States by its withdrawal from U.S. retail channels as well as the Y2K hiccup, which stifled demand for commercial desktop PCs. IBM held the fourth-place share rank in the worldwide PC market.

On a worldwide basis, the combined Fujitsu and Siemens weighed in at the number-five market share spot. The company's, worldwide growth rate, however, was well below the overall market average.

Table 1

Top 5 Vendors, U.S. PC Shipments, First Quarter 2000 (Preliminary)

(Thousands of Units)

Q1 2000 Q1 2000 Market Q1 1999 Market Growth

Rank Vendor Shipments Share Shipments Share 2000/

1999

1 Dell 1,980 17.1% 1,454 14.7% 36%

2 Compaq 1,890 16.3% 1,597 16.1% 18%

3 Hewlett-Packard 1,414 12.2% 847 8.5% 67%

4 Gateway 1,038 9.0% 981 9.3% 13%

5 eMachines 521 4.5% 284 2.9% 83%

Others 4,753 41.0% 4,813 48.6% -1%

All Vendors 11,596 100.0% 9,913 100.0% 17%

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

— Data for all vendors are reported for calendar periods.

— Data for Compaq includes shipments for Compaq, Digital Equipment, and

Tandem.

Source: IDC , 2Q, 2000

Table 2

Top 5 Vendors, Worldwide PC Shipments, First Quarter 2000 (Preliminary)

(Thousands of Units)

Q1 2000 Q1 2000 Market Q1 1999 Market Growth

Rank Vendor Shipments Share Shipments Share 2000/

1999

1 Compaq 3,969 13.1% 3,556 14.1% 12%

2 Dell 3,200 10.5% 2,451 9.7% 31%

3 Hewlett-Packard 2,468 8.1% 1,579 6.2% 56%

4 IBM 1,866 6.1% 2,171 8.6% -14%

5 Fujitsu Siemens 1,691 5.6% 1,589 6.3% 6%

Others 17,162 56.5% 13,958 55.2% 23%

All Vendors 30,356 100.0% 25,304 100.0% 20%

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

— Data for all vendors are reported for calendar periods.

— Data for Fujitsu Siemens includes shipments for Fujitsu and Siemens.