Poor Economic Conditions More Than Attacks Cause Dramatic Decline in Worldwide PC Market, According to IDC

FRAMINGHAM, MA – OCTOBER 17, 2001 – The worldwide PC market further deteriorated in the third quarter of 2001 with shipments declining by 13.7% over the same quarter a year ago and by 0.8% sequentially. This compares to an average sequential growth for the quarter of 15% over the past several years. According to IDC research, 3Q01 shipments were 29.1 million in the quarter.

 

"The continuing depressed worldwide economic conditions caused yet another quarter of disappointing PC shipments worldwide," said Tom Copeland, vice president of IDC’s Worldwide Quarterly Tracker products. "The September 11 attacks and subsequent events further accentuated an already difficult economic environment. Both consumer and commercial confidence is at an all-time low."

In Asia/Pacific (excluding Japan), PC sales in July and August held steady or posted slight improvements from the previous quarter. However, in September, consumer and corporate confidence spiraled downward. The HP-Compaq merger, terrorist attacks, companies in receivership, Taiwan typhoons, and the possibility of further political instability lengthened the "wait-and-see" attitude adopted by consumers and commercial customers alike. Deferred buying became the standard in many countries, as large PC procurement projects failed to materialize or were delayed. In Japan, economic conditions continued to deteriorate, with September particularly weak for commercial sales.

Growth in Europe also declined as both consumer and commercial confidence waned. July and August shipments were down substantially, and that trend continued in September. In addition, high channel inventories contributed to lower vendor shipments.

PC shipments in the United States in 3Q01 were in line with IDC’s post-attack revised forecast, falling 21% year on year and rising 1.7% sequentially. Given that the average sequential growth rate in the third quarter from 1994 to 2000 has been 14.1%, the sequential growth from the second quarter of 2001 was, in an extension of an alarming trend, well below the historical pattern.

"There was an ever-so-slight seasonal uptick in the third quarter in the United States based on back-to-school consumer buying and a strong public sector in July and August," said Roger Kay, director of client computing at IDC. "The events of September 11 shaved what might have been several more points of growth off the final quarter results. Despite the welcome return of something resembling seasonal behavior, the U.S. market is still greatly depressed from year-ago levels and is likely to continue to remain weak for at least several more quarters."

Vendors

Dell’s aggressive pricing and ability to react quickly to changing market conditions allowed the market leader to further distance itself from competitors. Dell was the only top international vendor that grew worldwide shipments sequentially.

Compaq had a particularly difficult quarter, with September shipments down significantly. Multiple factors contributed to Compaq’s difficulties, including customers’ uncertainty about the upcoming merger with HP as well as supply shortages due to logistics issues in the United States and typhoon[s] in Taiwan. Europe and Japan were particularly weak.

IBM shipments were the strongest in the United States, but outside North America deteriorating economic conditions pushed shipments downward sharply.

Hewlett-Packard also saw weakness around the world, with Japan particularly soft. One bright spot was that notebook shipments were up worldwide.

Gateway shipments grew slightly sequentially in the United States, but fell substantially elsewhere, as the company de-emphasized its non-U.S. operations.

Table 1

Top 5 Vendors, U.S. PC Shipments, Third Quarter 2001 (Preliminary)

(Thousands of Units)

Q2 2001 Q3 2001 Market Q3 2000 Market Growth

Rank Vendor Shipments Share Shipments Share 2001/2000

1 Dell 2,731 26.4% 2,578 19.7% 5.9%

2 Compaq 1,108 10.7% 2,258 17.3% -50.9%

3 Hewlett-Packard 962 9.3% 1,442 11.0% -33.2%

4 Gateway 814 7.9% 1,188 9.1% -31.5%

5 IBM 690 6.7% 739 5.6% -6.7%

Others 4,036 39.0% 4,884 37.3% -17.4%

All Vendors 10,341 100.0% 13,089 100.0% -21.0%

· 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.

· Gateway and Compaq are IDC estimates prior to company release of quarterly results.

Source: IDC, Sept. 2001

Table 2

Top 5 Vendors, Worldwide PC Shipments, Third Quarter 2001 (Preliminary)

(Thousands of Units)

Q2 2001 Q3 2001 Market Q3 2000 Market Growth

Rank Vendor Shipments Share Shipments Share 2001/2000

1 Dell 4,232 14.5% 3,870 11.5% 9.3%

2 Compaq 3,197 11.0% 4,690 13.9% -31.8%

3 IBM 2,013 6.9% 2,454 7.3% -18.0%

4 Hewlett-Packard 1,952 6.7% 2,620 7.8% -25.5%

5 Fujitsu Siemens 1,360 4.7% 1,623 4.8% -16.2%

Others 16,369 56.2% 18.483 54.8% -11.4%