Record PC Shipments to the U.S. Public Sector in the Third Quarter, Led by K-12 Education and Federal Government Markets, According to IDC

FRAMINGHAM, MA – DECEMBER 9, 2002 – PC shipments to the public sector in the United States reached a record high during the third quarter of 2002, according to IDC's U.S. PC Public Sector Tracker. With 2.78 million PCs shipped, the public sector grew at a rate of 20.9% year over year in 3Q02.


The biggest driving force in the public sector has been the education market, particularly the K-12 market, which accounted for nearly half of all PCs shipped to the public sector. Despite the shrinking budgets of state governments, which provide the bulk of the funding to education in the United States, the K-12 market enjoyed strong growth during 3Q02, with shipments growing double digits year over year. The higher education market also performed well.

Although accounting for a relatively small portion of all PC shipments to the public sector, the federal government enjoyed the strongest growth performance in the entire PC market, thanks to aggressive federal spending and an ongoing PC replacement cycle. The number of PCs shipped to the federal government more than doubled year over year. The weakest segment was state and local government, shipments to which shrank substantially, reflecting important budget shortfalls amid a tough economic environment.

The top-five vendors in the public sector market were Dell, Hewlett- Packard, Apple, Gateway, and IBM. Together, these vendors accounted for the bulk of PC shipments to public entities in 3Q02. "Vendors like Toshiba and Sony are also making important gains, particularly in the portable PC space, while white box system builders, like Premio PC, continue to dominate an important segment of the public sector buying population at the local and regional levels," according to David Daoud, senior analyst at IDC.

The public sector market expanded greatly in unit terms due to three important factors. The first was that the education sector remained recession- proof and was sheltered from the budget cuts many state and local governments were forced to implement across various programs. The second important factor was the increase in federal spending, which benefited many large departments, including the Department of Defense, the Treasury Department, and various other federal programs. The third factor was PC pricing. PC vendors were forced to lower their prices drastically in an effort to make market share gains, and these bargains meant flat revenue for the industry. In 3Q02, total public sector revenue grew at only slightly year over year to $3.48 billion.

IDC's U.S. PC Public Sector Tracker gathers PC market data in the United States by vendor, form factor, brand, processor brand and speed, and user segment. The research is part of the wider Worldwide and U.S. PC Tracker, which includes historical and forecast trend analysis as well as price band and installed base data.

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