Interesting PC article.
PC Sales Slowed Sharply in 2nd Quarter;
Dell Narrows Compaq's Lead in the U.S.
interactive.wsj.com
Excerpts:
While their aggregate numbers differ, the two firms agree that most PC makers" sales fell from the first quarter. Both also cite a much tighter race for the No. 1 spot in U.S. sales, as fast-moving Dell Computer Inc. pulled nearly abreast of Compaq Computer Corp. International Business Machines Corp., meanwhile, fell out of the top-five ranking for the U.S. market in both firms' estimation.
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Analysts at the two firms conceded that a sales-out measure might present a more accurate picture. Nevertheless, they predict Compaq will face an even more bruising battle with Dell, as both companies scrap for bragging rights in the U.S. market.
"The two companies are close enough that it's really a horse race at this point," said Scott Miller, an analyst at Dataquest. "They both are going to spend money to try to capture the top spot."
There is little dispute that Dell is shaking up the market. The company boasted more than 70% growth over the year-earlier quarter and was one of few manufacturers showing sequential growth, with IDC reporting a 21% sales jump, compared with the first period. Dell's model of letting customers configure the machines they buy, through direct telephone and Web sales, keeps Dell's sales costs and component inventories down. In response, Compaq and other companies with large dealer channels are using direct-sales experiments, such as allowing customers to configure their systems at retail stores.
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Packard Bell NEC Inc., once a leading force in consumer-retail sales, dropped from fourth place to fifth place in both U.S. and world markets. H-P barely edged out Gateway Inc. in the U.S. market, moving that direct-sales company from third to fourth place.
In addition to the inventory issue, Compaq's Mr. Pfeiffer acknowledged that demand from his company's customers is weaker than last year. He is optimistic, however, that conditions could improve in the second half of the year, driven partly by companies trying to deal with problems caused by the Year 2000 date change. Instead of changing PC software, he said, "there could be a different scenario as many companies say, 'we're just going to replace all of our PCs to deal with the problem.
Analysts for the two market-research firms didn't have a definitive reason for their differing growth rates. But Dataquest's Mr. Miller said his firm's numbers come partly from data from chip makers and other component suppliers, a technique that tends to count more resellers and small PC assemblers than IDC's methodology.
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