PC Titans Continue Battle for Leadership as Market Lumbers Forward, According to IDC

FRAMINGHAM, MA – APRIL 17, 2003 – Dell overtook Hewlett-Packard once again as the leading vendor in the midst of a slow worldwide PC market. The two companies have traded places over the past year following the merger of HP and Compaq, but Dell was able to regain the lead in total worldwide shipments in the first quarter of 2003, according to IDC’s Worldwide Quarterly PC Tracker. In an aggressive pricing environment, Dell's direct business model and steady growth boosted its shipments above HP’s. Reflecting the accelerating pace of portable computing adoption, Toshiba moved into the number 5 position both in the United States and worldwide.

 

Worldwide PC shipments of 34.6 million were up 2.1% year-on-year, in line with forecast growth of 2.0%. In the U.S., aggressive pricing and mobile adoption helped shipments grow by 1.5% year-on-year, almost 2% ahead of forecast. Sequentially, shipments were down 9.8% worldwide and 7.0% in the United States, following a typical seasonal pattern related to the shift from consumer to commercial focus during the first quarter of the year.

"While results were close to forecast, consumer spending was relatively weak, and we have yet to see a significant rise in commercial activity," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "A slow economy and talk of war reduced demand in the first quarter, but many expected to get back to business soon. Now, people are starting to realize that military victory in Iraq still leaves questions about global security and economic recovery, and it may be a while before growth picks up."

"The debut of Toshiba in the top 5 heralds the era of mobile computing," said Roger Kay, director of Client Computing at IDC. "The rise of a company that focuses nearly exclusively on notebooks gives a clear and early reading of just how strong the shift from desktops to notebooks was this quarter — and will be from here on out. Although Toshiba benefited most visibly from this trend, other vendors signaled similar shifts in product mix."

Regional Outlook

United States – The U.S. market was slightly ahead of forecast, but still down from year-on-year growth of almost 4% in the fourth quarter. Aggressive pricing from market leaders helped sustain demand in the typically slow first quarter.

EMEA – Still waiting for a recovery in commercial spending and with mixed consumer results, EMEA was nevertheless the only region to improve shipment growth relative to the fourth quarter. Overall growth was in line with forecasts at more than 4%, supported by continued strong growth in portables.

Japan – Despite a boost from the end of the fiscal year, the Japanese market remained weak and missed expectations slightly. The Japanese market had been steadily slowing the decline in PC shipments to a relatively small -4% in the fourth quarter, but first quarter growth deteriorated as slow global and domestic economies constrain demand.

A/P – Asia/Pacific remained the fastest growing region with shipments rising nearly 10% year-on-year, as China, India, and Australia all posted double-digit percentage growth rates. Still, sluggish corporate demand in countries like Korea as well as the delay of a large education tender in Malaysia brought regional growth in just below forecasts.

Vendor Highlights

Dell – Comfortably sustaining year-on-year growth above 20%, Dell recaptured the lead in total worldwide PC shipments. While the United States continues to account for more than 62% of Dell shipments, the company gained share in all major regions, with year-on-year growth of over 20%. The small and medium business segment was a key source of growth for Dell, while a marginal sequential increase in U.S. consumer sales also boosted growth.

HP – Aggressive pricing helped HP improved its year-on-year growth from the fourth quarter. The company also saw growth in emerging categories such as Media Center and Tablet PCs as well as in portables. Nevertheless, the company's share slipped to 15.8% worldwide as shipments were down almost 6% year-on-year.

IBM – Boosted by growth of more than 25% in Asia/Pacific, IBM was only slightly behind worldwide market growth in the first quarter. Despite constrained commercial spending the company moved ahead of Gateway in the United States to reach the number 3 position.

Fujitsu-Siemens – Despite continued weakness in the Japanese market, Fujitsu-Siemens maintained growth of nearly 2% worldwide. Shipments in Europe, the company's other major market, were up slightly, but trailed market growth.

Toshiba – Managing a third straight quarter of double-digit growth, Toshiba continued to reassert itself, moving into the top 5 both in the United States and worldwide. The company's growth reflected strong demand for portables as well as the company's solid execution.

Gateway – With seasonally weak consumer purchases in the first quarter, Gateway continued to suffer from aggressive price competition in the U.S. market. While the company managed growth of 3% in the fourth quarter, shipments once again declined by nearly 15% year-on-year. The company has closed stores and faced layoffs to cut expenses, but continues to lose ground.

Gateway – Although Gateway continued to feel pressure from the market leaders in the U.S., the company managed to hold on to third place, ahead of IBM.

Top 5 Vendors, U.S. PC Shipments, First Quarter 2003 (Preliminary)

(Units Shipments are in thousands)

Q1 2003 Q1 2003 Market Q1 2002 Market Growth

Rank Vendor Shipments Share Shipments Share 2003/2002

1 Dell 3,726 31.8% 3,012 26.0% 23.7%

2 Hewlett-Packard 2,283 19.5% 1,086 9.4% 110.2%

3 IBM 568 4.8% 574 5.0% -1.0%

4 Gateway 506 4.3% 645 5.6% -21.6%

5 Toshiba 380 3.2% 307 2.7% 23.9%

Others 4,271 36.4% 5,940 51.4% -28.1%

All Vendors 11,734 100.0% 11,563 100.0% 1.5%

for reference HP (Merged) 2,283 19.5% 2,345 20.3% -2.6%

Notes:

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

PCs includes Desktop, Notebook, Ultra Portable, and Standard Intel Architecture Servers <$25k. PCs do not include handhelds. Data for all vendors are reported for calendar periods. Data for HP includes shipments for the new Hewlett-Packard (including Compaq merger) starting in Q2 2002, and only Hewlett-Packard (excluding Compaq) data for Q1 2002 and 2001. This reflects the legal status of the companies, which merged in Q2 2002. Data for HP (Merged) includes shipments for Hewlett-Packard and CompaqSource: IDC, April 17, 2003 Top 5 Vendors, Worldwide PC Shipments, First Quarter 2003 (Preliminary) (Units Shipments are in thousands) Q1 2003 Q1 2003 Market Q1 2002 Market Growth Rank Vendor Shipments Share Shipments Share 2003/2002