PC Market Growth Tops 17% As Low-Cost and Portable PCs Continue To Fuel Domestic And International Markets

FRAMINGHAM, MA – OCTOBER 17, 2005 – Worldwide PC shipments increased by more than 17% in the third quarter despite rising interest rates and oil prices, and a more conservative economic outlook, according to IDC's Worldwide Quarterly PC Tracker. The appeal of both low-cost and portable systems continued to drive substantial growth. International markets continued to grow quickly, but even U.S. shipments grew by 11% over the prior year. The latest data show total worldwide PC shipments increasing by 17.1% year on year versus an August forecast of 13.3%.

"We continue to see remarkable growth in the PC market and relative independence from broader economic trends," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "Currently, the economic environment is not the critical factor affecting PC adoption cycles. What we're seeing now is a combination of PC replacements and new users responding to low-price milestones. Slowing economic growth should eventually constrain PC demand, but for the moment, the outlook remains quite strong."

"Notebook adoption continued to drive PC growth in the U.S. complemented by the desktop market which was stronger than expected due to aggressive pricing," said Richard Shim, senior research analyst of Client Computing at IDC. "The third quarter is typically defined by the back-to-school season, which was particularly strong this year. Notebooks were a significant influence in the consumers' back-to-school shopping and that carried over to other markets."

Regional Outlook

— United States – A strong back-to-school season provided a boost to the market and mid-tier vendors performed well following distribution channel adjustments. Hurricane Katrina, which made landfall in Louisiana on August 29, likely had some impact on the last month of the quarter, although a larger impact is expected for the fourth quarter as rising fuel prices and falling consumer confidence contribute to economic and inflationary worries.

— EMEA – Small business and consumer purchases related to European Union expansion, general infrastructure investments, and low prices continued to fuel the surge in both portable and desktop systems. A solid back-to-school market and overall strong growth set the stage for a robust fourth quarter.

— Japan – The consumer market continued to improve, pushing growth into double-digits in response to attractive new product launches. The commercial market also remained strong despite expectations of slowing growth.

— Asia/Pacific – Rising oil prices and measures to control the Chinese economy have done little to constrain PC growth. Low prices and rising adoption continued to fuel both business and consumer purchases. Demand for portable PCs, which now account for over 20% of total shipments, also remained strong.

Vendor Highlights

— Dell – Dell had another solid quarter with strong growth across all regions. Total growth of almost 17.8% was down from a surge of almost 24% in the second quarter, but up from a low of 14% in 1Q05. The company benefited from particularly strong growth in EMEA, Asia/Pacific, and Latin America, although other vendors also fared well in EMEA.

— HP – HP continued to gain momentum with growth of 17.9% boosted by its leadership position in the rapidly growing EMEA region and by a solid performance in Asia/Pacific. The company also saw strong growth of portable systems and in both enterprise and consumer segments.

— Lenovo – Lenovo performed well in its second quarter post-merger. Total shipments were up over 13% year on year with record volumes across form factors. Although year-on-year growth was slightly behind the market, it improved significantly from the second quarter and sequential growth was above market. The growth reflects the company's success integrating IBM and Lenovo and growing comfort with the new company among clients.

— Acer – Acer continued its rapid expansion with growth over 50% in the third quarter. Although growth was down from a peak in the second quarter, the company continued to see rapid growth in EMEA and is building momentum in North America and Asia/Pacific.

— Fujitsu/Fujitsu Siemens – Fujitsu Siemens continued to gain share in the third quarter, although growth remains focused in Europe. Shipments in EMEA were up over 28% in the third quarter, accounting for nearly 65% of total volume. Japan accounted for nearly one third of shipments, but growth was roughly flat.

— Gateway – Gateway delivered its second consecutive quarter of significant recovery. Following years of decline and the acquisition of eMachines in 2Q04, the company now appears to be on the right track. Total shipments grew by over 25% in the third quarter – down a couple points from the second quarter, but still substantially ahead of the market. The company clearly leveraged its new distribution partners and appears well positioned to capture consumer demand in the fourth quarter.

— Apple – Apple cranked up its performance another notch, boosting growth in total PC shipments by 48%. The company refreshed the Mac-Mini line and its PC business continues to benefit from the rapid growth of its music business. Growth was particularly strong in its retail outlets and in Europe, although growth in the Americas and Japan was also healthy.

Top 5 Vendors, Worldwide PC Shipments, Third Quarter 2005


(Units Shipments are in thousands)


Rank 3Q05 Vendor Shipments Market Share 3Q04 Shipments Market Share Growth 2005/2004

1 Dell 9,483 18.0% 8,050 17.9% 17.8%

2 HP 8,464 16.0% 7,178 15.9% 17.9%

3 Lenovo 4,072 7.7% 1,163 2.6% 250.2%

4 Acer Fujitsu/Fujitsu 2,493 4.7% 1,622 3.6% 53.7%

5 Siemens 1,995 3.8% 1,735 3.8% 15.0%

Others 26,303 49.8% 25,347 56.2% 3.8%

All Vendors 52,809 100.0% 45,095 100.0% 17.1%

3 Lenovo (Merged) 4,072 7.7% 3,602 8.0% 13.1%


— Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under

which they are sold.

— PCs include Desktop, Notebook, Ultra Portable, and x86 Servers.

— PCs do not include handhelds. Data for all vendors are reported for calendar periods.

— Data for Lenovo includes shipments for IBM PCD (including Desktop and Portable PCs and excluding x86 Servers and

Personal Workstations) starting in 2Q05, and only Lenovo data for prior quarters. This reflects the legal status of the companies,

which merged during the second quarter of 2005.

Source: IDC, October 17, 2005

Top 5 Vendors, U.S. PC Shipments, Third Quarter 2005 (Preliminary)

(Units Shipments are in thousands)

3Q05 Rank 3Q05 Vendor Shipments Market Share 3Q04 Shipments Market Share Growth 2005/2004

1 Dell 5,638 33.2% 5,023 32.8% 12.2%

2 HP 3,450 20.3% 3,133 20.5% 10.1%