European PC sales grow at record slow pace
LONDON, July 24 (Reuters) - European personal computer sales grew at their slowest pace since the start of the industry in the second
quarter of 2000, dragged down by hesitant purchasing from major corporations, research showed on Monday.
Market research company Context found that PC shipments were only 7.3 percent higher in the April-June period, compared with the same
quarter a year ago.
The slow quarter comes on top of a weak first quarter when unit sales grew by 8.0 percent year-on-year.
``It's the worst quarter ever,'' said Jeremy Davies of Context.
PC manufacturers focusing on the enterprise market were hit hardest, with the world's two largest producers setting the tone.
Compaq (NYSE:CPQ - news) shipped 2.1 percent fewer PCs, while Dell (NasdaqNM:DELL - news) climbed four percent. IBM (NYSE:IBM - news), the world's third
largest PC producer on a par with Hewlett-Packard (NYSE:HWP - news), saw its sales fall by 21.4 percent and dropped to fifth place in Europe.
``There have been enormous purchases from the corporate side before the millennium. They've done that, and now they sit back. Some enterprises are even holding off the
transfer to Windows 2000,'' Davies said.
``It's still wide open what's going to happen in the second half,'' he added.
CONSUMER DEMAND IS NOT DRYING UP
However, demand from European consumers was not drying up.
Hewlett-Packard (H-P), Acer , NEC and Apple (NasdaqNM:AAPL - news) -- all selling hard to homes and small offices -- outgrew the market. H-P grew 14 percent, Acer
34 percent, NEC 22 percent and Apple 29 percent.
Selling prices for PC's dropped sharply. The average business desktop computer was sold for $1,147 in March, down from $1,606 a year earlier.
Consumer PCs also became cheaper, on the back of popularity for ``sub-$1000 PCs'', but their prices did not drop as steeply. Consumers paid an average $1,046 in March,
compared with $1,409 in the same month in 1999.
The price gap between business and consumer computers has narrowed down to just $101 from $197 as corporate purchasers prefer dressed down terminals, while
consumers still want the bells and whistles needed to benefit from multimedia such as Internet music and video.
A strong consumer brand such as Apple, which markets its iMac as an Internet fashion statement, was able to demand a 25 percent price premium over Windows-Intel
machines with equal performance.
The drop in PC unit growth is in line with worldwide figures that were released by Gartner Group's Dataquest earlier on Monday.
Whereas second quarter global sales grew by 18 percent, in the U.S. PC sales advanced by just 11.5 percent, down from 32.6 percent in the same three months of 1999,
Dataquest's preliminary data showed.
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