IDC Says Australian PC Market Takes a Pounding

NORTH SYDNEY – OCTOBER 24, 2001 – Yet again the PC market in Australia has taken a pounding, and this was consolidated by the events of September 11th. IDC has radically reduced its market forecast for the year to reflect a negative unit shipment growth rate of over 8% over 2000, and the way the market is starting to pan out at the moment, this could be conservative.

"Preliminary estimates for the market show a drop from 526,000 units in Q2 to 500,000 units during Q3. This is a decline of 4.9 percent sequentially. Year on year, this proportion blows out to a whopping 20.0 percent decline as Q3 last year was the biggest quarter in recorded history for Australia", said Logan Ringland, IDC Senior Analyst, Computing Hardware.

There have been several factors that have facilitated this slow down in the marketplace. These include:

Economic instability within the local and worldwide economies ensuring the tightening of belts within the corporate market Continued interest rate cuts Collapses of major Australian institutions: HIH, Ansett, Pasmenco, OneTel, etc. The Federal election is just on the horizon and instability around tax issues concerns the consumer market: the election is also stalling the roll-out of some government contracts.

A lack of compelling reasons to purchase new PCs – installed technology is often more than enough to perform the functions of the majority of users. Possibly the impending launch of Windows XP has also delayed purchases as end users wait to get the new platform. But also the events of September 11 have resulted in organisations and consumers alike, wanting to limit their large purchases if they can?just in case.

There must be something about Q3 in the Australian market that sees the rankings within the top 5 continue to change. After almost 6 years of competing in the Australian market, Dell has managed to depose its long time target, Compaq, from first place in the market. While Compaq experienced mammoth growth in the second quarter of the year, it could not sustain this growth and slipped back significantly, while Dell managed to capitalise on the spending spree the government departments went on, and grew its business sequentially, thus growing its market share in a shrinking market.

TOP 5 VENDORS (preliminary estimates only)

1. Dell 12.5%

2. Compaq 11.3%

3. IBM 9.3%

4. HP 5.0%

5. Apple 4.9%

Total 500,000 units

IBM also managed to increase its sales sequentially as the vendor tries to reposition itself away from the consumer market and back into its traditional market, the corporate sector. H-P has returned a disappointing result for the quarter as the vendor continues to remain quiet. Its traditional strength in the consumer market is still there but its reliance on these sales to prop up its corporate sales has seen the vendor slip a long way from the heights it had enjoyed. Apple is now chomping at its heels as the vendor experiences great sales from its new designs of notebooks. It more attractive price points have seen the vendor reach an unusually high level of sales for what is traditionally a very slow quarter for both themselves and the overall market.

"The outlook for Q4 is yet again bleak. While the release of XP will have a positive effect on getting people thinking about PCs again, there is little in the way of applications that will inspire end users. This, therefore, compounds the issue of PCs becoming a commodity item. While there are some large corporate and government contracts still being delivered on, the election has seen these roll-outs halted or slow down."

"Consumer confidence and economic indicators are such that the economy should pick back up after the election and this should help consumer and small business sales. Watch for more price cuts and better bundling solutions," further added, Logan Ringland, Senior Analyst, Computing Hardware.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and eBusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts local and worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organisations, eBusiness companies and the financial community. Additional information can be found at www.idc.com.au

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