October 25, 1999
European PC Sales Surge 19.3%
On Strong Small-Firm Demand
By NEAL E. BOUDETTE
Staff Reporter of THE WALL STREET JOURNAL
European personal computer sales surged 19.3% in the third quarter as strong demand from small and medium-size businesses offset the damping effect of year 2000 on corporate purchasing, according to London-based market researcher Context.
The rise in third quarter unit sales to 6.46 million PCs brightens the outlook for the year's final quarter and allays fears that sales would plunge as work on the millennium bug will reach a peak, said Jeremy Davies, senior partner at Context.
"Our prediction is that the fourth quarter is going to be OK. It may not be brilliant, but it is definitely not going to be a disaster," Mr. Davies said.
A big winner in the third quarter was Fujitsu Siemens Computers BV. Formed by the merger of the PC units of Siemens AG and Fujitsu Ltd., the company sold 715,000 PCs in the third quarter, up 47% year-to-year. Its market share climbed to 14%. In the second quarter, before the merger, the two companies had a combined 11.7% of the European market.
Compaq Computer Corp. topped Europe with 18.2% market share, although its unit sales only kept pace with the market, rising 19.3% to 1.18 million PCs. In third place, Dell Computer Corp. saw unit sales climb 50% to 672,000, for market share of 10.4%. International Business Machines Corp. was fourth with an 8% share of the market as unit sales increased 16% to 514,000. Hewlett-Packard Co. sales grew 33.5% to 459,000 PCs, for a market share of 7.1%.
PC sales in Germany, Britain, the Netherlands, France and Spain all rose by between 19% and 23%. In Sweden, where government and employer subsidy programs sparked a PC buying binge last year, sales fell 23.5%.
Y2K did take a toll on third quarter purchases by large corporations, but smaller companies more than made up for it.
"The big fear was that there would be a meltdown, but small and medium-size enterprises have gone on an incredible buying spree and kept the market up," Mr. Davies said.
Fourth-quarter growth could come in at 18%-19% if manufacturers can keep retail shelves stocked and meet the right price points, he added.
Whether they can is a question because the recent earthquake in Taiwan has left some key components in short supply, and pushed up the prices. Dell recently warned higher memory prices due to the earthquake would hurt third-quarter profit.
"You can't get four [mega]-byte hard drives right now," said Winifried Hoffman, Fujitsu Siemens Chief Executive.
Fujitsu Siemens should have little trouble producing high-end PCs because its parent companies produce memory chips and components, Mr. Hoffman said. However, for very low-cost machines, "December will be tight."
Likewise, Compaq, IBM and Hewlett-Packard may not be as pinched because they carry more inventory than Dell, Mr. Davies said. "What a wonderful time to have computers in the channel," he said.
Write to Neal Boudette at neal.boudette@wsj.com
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