The Direct Channel Ships More PCs than the Commercial Channel for the First Time in 3Q99, IDC Reveals

FRAMINGHAM, Mass., January 12, 2000 – For the first time ever, the direct channel bumped the commercial channel out of the top spot for the most PCs shipped in the United States. On the strength of 29% growth in PC shipments from a year ago, the direct channel was able to account for 31.5% of all PCs shipped in 3Q99. The commercial channel, meanwhile, checked in with a 30% shipment share, according to a new International Data Corporation (IDC) report detailing U.S. PC distribution channels.

During the first three quarters of 1998, the direct channel accounted for 31% of all PCs shipped, compared with 36% for the commercial channel. However, during the same time frame in 1999, the direct and commercial channels were neck and neck at 31.5% and 31.8%, respectively.

"While these results are good news for the traditionally direct vendors, they are bad news for vendors sticking to indirect-only distribution strategies," said Joseph Rigoli, an analyst with IDC's Emerging Consumer and PC Channels research program. "However, the commercial channel's decreasing market share does not comment necessarily on the profitability of resellers that make up this channel. Commercial channel business models are changing as these resellers transition to service agencies providing value-added services on PCs purchased directly from manufacturers."

According to IDC, the retail channel also performed strongly in 3Q99 with a 33% increase in shipments from the year-ago period. "First-time buyers in the consumer space who have a low level of technical expertise contribute greatly to the retail channel's continued growth," Rigoli said.

3Q99 marks the first time that IDC has tracked Internet direct sales. IDC credits the Internet direct channel with all vendor sales that are completed and paid for electronically via an Internet interface with end users. Only 5% of U.S. PCs were sold via the Internet direct channel.

Summarizing what 3Q99 U.S. PC channel data means, Rigoli said, "To be successful, PC vendors will need to use a combination of direct and indirect selling models that leverages the resellers' personal touch with end-user segments, the logistical efficiency of direct selling, and the customization of the supply chain to the particular distribution solution that is created. But, above all, PC vendors need to give customers a choice."

IDC recently published U.S. PC Distribution Channels 3Q99 and Year-to-Date Review (IDC #B21121). This report examines activity in the U.S. channels during 3Q99. It shows PC shipments of the top 10 vendors by channel segment, comparing 3Q99 and 3Q98 data on shipments and share by broad channel type, and by the individual channels that make up the broad channels. To order a copy of the report, contact Patrick Steeves at 1-800-343-4952, ext. 6787 or at psteeves@idc.com.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 42 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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