Strong back-to-school and continued notebook momentum fuel EMEA PC sales growth in 3Q, says IDC

LONDON – OCTOBER 20, 2005 – In line with expectations, the EMEA PC market displayed solid growth in the third quarter, expanding by 20.2% year on year in 3Q05, according to preliminary data released today by IDC. Boosted by strong back-to-school demand and continued momentum in the notebook space, shipments rose to 15.9 million units across Europe, the Middle East, and Africa.

"As expected, a strong back-to-school and buoyant marketing activity along with attractive price points drove PC sales across the region," said Karine Paoli, research director for IDC's EMEA PC group. "Consumer demand for notebooks remained unabated, assisted by aggressive promotions in the retail channel, while SMBs also continued to favor portable systems leading to solid 39% growth of notebook shipments in EMEA."

Notebooks continued to drive overall growth across the region, but desktop sales maintained healthy growth at over 11%. Demand for digital entertainment systems coupled with attractive bundles continued to stimulate consumer desktop purchases. Commercial desktop sales softened, however, directly impacted by slowing corporate refresh activity and strong desktop replacement trends still observed in the SMB space. Component shortages, in particular for chipsets, also contributed to constrain overall desktop volumes.

All regions performed in line with forecasts. Western Europe benefited from the strong back-to-school season and posted solid 16% growth in 3Q, while infrastructure investment and demand for notebooks continued to boost sales in CEE and MEA to 27% and 33%, respectively.

"European markets behaved close to expectations," said Elsa Opitz, research manager, EMEA PC Tracker. "Growing demand and buoyant notebook sales boosted the market in southern Europe, with Spain and Italy recording 23% growth overall, as well as in the Nordics, where PC sales outpaced expectations. France also grew by a robust 17%, driven by a dynamic desktop market and continued notebook expansion in the consumer and SMB segments.

Affected by fragile business confidence and an uncertain political outlook, Germany reached projections of just under 11% growth. The U.K. PC market maintained soft trends overall in 3Q as the wave of corporate desktop renewals gradually reaches completion, but strong consumer demand kept growth at just above 12%. In CEE, Russia continued to perform well while booming notebook sales across all countries helped fuel shipment growth in the region, and outstanding growth in Saudi Arabia and Turkey contributed to the strong regional performance in MEA."

Although price erosion slowed sequentially, price levels continued to show significant declines compared with a year ago, with close to -20% for notebooks compared with 3Q04, resulting in much more subdued revenue growth results across the region.

"While demand for portables is expected to remain buoyant in the final quarter of the year, the increasing share of Asian players in the European marketplace will contribute to maintaining a very competitive environment," said Karine Paoli.

Vendor Highlights HP maintained a solid leadership in EMEA, with a healthy 15% growth year on year driven by strong notebook performance across both the consumer and commercial segments and an effective retail strategy. Desktop sales displayed softer results as the vendor suffered a difficult year-on-year comparison in the consumer space and continues to face tough competition from Dell in the commercial space.

Dell held a strong second position in the overall ranking and continued to gain share in EMEA, recording solid double-digit growth in both the desktop and portable markets, and closing the gap with HP in the commercial segment. The direct vendor maintained an aggressive customer acquisition strategy across all segments, with very attractive offerings aimed at consumers and SMBs, in particular in the notebook space.

Acer maintained momentum in the notebook market with aggressive price points and offerings meeting the demands of the retail channel in 3Q, while continuing to grow its desktop sales and expand in CEMA. After growth was boosted in 2Q by early shipping of products ahead of the back-to-school season, resulting in increased inventory levels in some countries, the vendor maintained its channel strategy moving forward with large volumes shipped in CEE this quarter ahead of 4Q.

FSC continued to outperform the market and strengthened its fourth position in EMEA. The vendor maintained a very successful focus on mobility, which enabled it to post the strongest growth in notebooks among the top 5 vendors at over 60% year on year. FSC maintained a strong performance in the consumer space, while continuing to expand and gain share outside Germany thanks to a competitive offering and effective SMB channel strategy across EMEA.

Lenovo displayed a softer performance, directly impacted by the slowdown in corporate refresh activity, while fierce competition and a strong quarter last year for former IBM-PCD also contributed to constrain the vendor's results this quarter. Lenovo nevertheless held well despite competition from all sides and ongoing transition to the new organization, while the introduction of new ThinkPad products clearly outlines Lenovo's ambitions in the notebook space.

NEC CI/Packard Bell and Apple, ranking sixth and ninth, respectively also posted strong double-digit results, outlining overall consumer market strength, with Packard Bell maintaining a key position in the retail channel, and continued to expand in the Nordics and Southern Europe, while Apple posted a very strong quarter assisted by the success of its Mac Mini product line and iMac sales, and leveraging from the iPod momentum.

Finally, the success of Taiwanese vendor Asus (entering the EMEA Top 10 ranking in tenth position this quarter), and of Samsung, along with growing BenQ and LG, contributed to increase the competitive environment in the notebook space, outlining the increasing share of Asia-based players in Europe.

Shipments are branded shipments for all form factors (including desktop and notebooks) and exclude x86 servers as well as OEM sales for all vendors.

Data for all vendors is reported for calendar periods.

(*) Historical data for IBM PCD (excluding desktop workstations and x86 servers) and comparison with 3Q05 is provided here for reference purposes to allow year-on-year analysis but does not reflect the historical performance of Lenovo prior to 2Q05.

For more information on IDC's EMEA Quarterly PC Tracker or other IDC Personal Computing research services, contact Research Director Karine Paoli, +44 (0) 20 8987 7218, or email kpaoli@idc.com. Alternatively, contact your local IDC office.

About IDC

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