Michael and all,
This is from WSJ.
PC Sales Surged in Quarter;
Top Suppliers Expand Control
By LEE GOMES
Staff Reporter of THE WALL STREET JOURNAL
The U.S. personal-computer market boomed in
the second quarter, supporting healthy
world-wide growth.
Concerns about sluggish demand had battered
some technology stocks early in the quarter. But
the two biggest PC-research firms, International
Data Corp. and Dataquest Inc., reported that U.S.
unit sales grew 19% and 21.9% from the
year-earlier quarter, respectively, and that
world-wide unit sales rose 15% and 17%,
respectively. In addition, both research firms
reported that the top four PC suppliers --
Compaq Computer Corp., International Business
Machines Corp., Hewlett-Packard Co. and Dell
Computer Corp. -- control nearly 38% of the
computer market, up from 34% a year ago.
"The big vendors are getting bigger," said Scott
Miller of Dataquest.
Bigger Is Better
The top PC suppliers continue to see sales gains
that outstrip those of the overall market. Unit
sales at Dell, for example, grew 52% according
to IDC and 61.4% according to Dataquest; both
outfits reported a 42% surge for Compaq. H-P
also saw a big gain, leaping to the No. 3 spot
from No. 6, on sale increases of between 48%
and 58%. IDC's Kevin Hause said H-P's
explosive growth was the result of a strong line of
notebook computers, which are sold directly to
businesses, and of aggressive pricing in
corporate markets.
Analysts said the leading PC makers used the
economies of scale gained from their size to take
market share away from such second-tier players
as AST Research Inc. and Digital Equipment
Corp., as well as from third-tier direct-sales
companies. The trend appears even more
pronounced in the business market, where the
top four companies now control almost half the
market, IDC said.
Analysts said the consolidation is very likely to
accelerate, portending a major shift of strategic
power in high technology. One result could be that
the top PC makers will gain leverage with the
industry's two key suppliers, Intel Corp. and
Microsoft Corp., on such issues as technology
direction and pricing.
Both surveys showed that Apple Computer Corp.
continued to wither, dropping to No. 9 on IDC's
list from No. 4 a year ago, on a 21% decline in
unit sales. Closely held Packard-Bell NEC Corp.
also lagged behind others in the industry, with
sales slipping 1.7%, according to Dataquest, but
growing by 5%, according to IDC.
The booming economy in the U.S. made it the
healthiest computer market, much more robust
than Japan and Europe. Indeed, IDC and
Dataquest said the U.S. market was strong in
both businesses and homes.
Pricing Problem
The overall growth figures show the PC industry's
world-wide sales growth rate either holding
steady or advancing slightly from the previous
quarter. Dataquest's estimated 17% growth rate
represents an increase from the 16% it reported
for each of the previous two quarters, while IDC's
15% is identical to its figure for the first quarter.
While neither firm's numbers are anywhere near
the 25% growth rates seen in 1995, they at least
indicate that the PC market hasn't cooled as
much as technology bears had feared.
But even as the big PC companies ring up sales,
they must deal with a problem: prices. According
to IDC, the average computer price this year will
be $1,878, down 10% from $2,068 last year.
Analysts cite several reasons for falling prices.
Most of the big PC companies have brought out
a new line of $999 machines that have been a hit
at computer stores. In addition, the prices of PC
components, such as memory chips, continue to
fall. Further, traditional vendors are being forced
to match the lower prices of direct sellers like
Dell, if not in their official price lists then in the
negotiations leading up to a big business sale.
Big companies "are being very aggressive
behind closed doors," said Mr. Miller at
Dataquest.
While the two studies agreed on most topics,
they differed in outlook. Mr. Miller expects unit
sales over the rest of the year to grow at a more
rapid rate than the first half, largely because of
the increased availability of Intel's Pentium II
microprocessor. IDC's Mr. Hause, however, said
he expects growth rates for the rest of the year to
remain near those seen in the first two quarters. |
