Dell ties with Compaq on Q2 U.S. PC shipments
(Embargoed for Monday, July 27) By Eric Auchard
NEW YORK (Reuters) - Dell Computer Corp.'s rapid growth in personal computer shipments during the second quarter pulled it into a tie for first place with long-time market leader Compaq Computer Corp., according to separate reports released Monday.
Meanwhile, International Business Machines Corp. dropped from the top five ranks of PC vendors in terms of combined commercial and consumer PC shipments within the United States.
Overall, both U.S. and worldwide industry growth was mediocre during the second quarter due to efforts to reduce a glut of inventory that had flooded sales channels in the first half of 1998 and continued economic woes in Asia.
Worldwide, Compaq remained No. 1 and significantly ahead of the rest of the pack, while Dell and IBM ranked No. 2 and No. 3, swapping positions with each other from a year ago.
These are the preliminary findings from separate surveys released Monday by International Data Corp. (IDC) and Dataquest, two leading technology market research firms, and based on estimates provided by the PC makers themselves.
''Dell and Compaq were neck and neck for the top spot (in the United States),'' said Christine Arrington, a personal computer industry analyst with Framingham, Mass.-based IDC.
Dell shipped roughly 1.1 million computers in the second quarter, up more than 70 percent year-over year, pushing its U.S. market share to 14 percent from 9.1 percent a year ago.
In the same period, Compaq shipments grew only in the mid single-digits or low double-digits and its market share remained the same or smaller, market researchers said.
Long-time market leader Compaq and fast-growing Dell each had 14.3 percent of total U.S. PC shipments, according to IDC. Dataquest said Compaq grew 14.4 percent while Dell's market share was 14.2 percent -- a virtual tie.
Shipments slowed among indirect PC vendors like Compaq and IBM as they moved to sell off outmoded inventory and cut the number of weeks of inventory stocked with distributors to more efficiently compete with direct suppliers like Dell, she said.
Compaq's sales channel-clearing efforts led the company's shipments to decline 21 percent in the second quarter versus the first quarter, while Dell's shipments grew 21 percent from the March quarter to the June quarter of 1998, IDC estimated.
Without the addition of Digital Equipment PCs to Compaq's numbers, Dell would have actually pulled ahead in the race. Compaq acquired Digital in June and the surveys counted the entire second quarter of Digital shipments as Compaq machines.
Worldwide, the PC industry shipped a little over 21 million computer units, up 13.9 percent from the 1997 second quarter, Dataquest said. Western Europe continued its rebound of recent quarters but Asia/Pacific and Japan markets suffered negative year-to-year growth, the San Jose, Calif.-based firm said.
In the United States, 8 million PCs were shipped during the quarter ended in June, up 10 percent from a year ago and down 1 percent sequentially from the first quarter of 1998, IDC said. U.S. PC shipments were about 40 percent of the world's total.
Rounding out the top five U.S. personal computer vendors were Hewlett-Packard Co., Gateway Inc. and Packard Bell NEC, each of which had almost identical market shares during the second quarter at around 7.7 percent, IDC said.
Other computer makers accounted for the remaining 48 percent of the market, down from 54 percent a year ago, as the major brands gained market share at the expense of lesser names.
But growth rates diverged enormously. Gateway and H-P shipments each grew 33 percent, while Packard Bell's fell 11 percent as retail buyers hunted for lower-priced PCs, driving its position down to No. 5 PC supplier from No. 2 a year ago.
Dell's direct, build-to-order manufacturing system enables the company to turn around inventory within roughly a week, while wringing out distribution costs and keeping its pricing competitive.
By contrast, Compaq, Hewlett and IBM succeeded in cutting in half PC inventory build-ups of up to eight to 10 weeks at the start of the second quarter only by slashing product prices and limiting the amount of shipments to distributors.
''Dell's well-managed supply chain has effectively forced the indirect players to come to terms with some pretty substantial inefficiencies,'' Dataquest analyst Scott Miller said.
Don't count out Compaq yet, he said. Compaq is moving to improve its build-to-order capacity, which should allow the company to compete more aggressively with Dell in the future.
''If you believe that Compaq is getting its house in order -- and it's pretty close (to doing so) -- you've got an absolute horse race for No. 1,'' he said of the rest of 1998.
^REUTERS@ Reut16:18 07-26-98
(26 Jul 1998 16:17 EDT)
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