Compaq slips again
By Stephen Shankland
Staff Writer, CNET NEWS.COM
April 25, 1999, 9:00 p.m. PT
Compaq Computer remains king of the heap when it comes to PC sales, but its closest
rivals are rapidly bridging the gap.
Compaq earned top rank among PC manufacturers in U.S. sales for the first quarter of 1999, selling 15.7 percent
of the 8 million systems shipped, according to market research firm Dataquest. Worldwide, Compaq garnered a
13.4 percent share, Dataquest said.
Nonetheless, Compaq lost 2.1 percent of its domestic share compared to year-ago figures, while archrival Dell
gained 3.2 percent, rising from 11.4 to 14.3 percent.
The rest of the top five posted gains as well. No. 3 Gateway went from 8.1 percent to 9.4 percent, No. 4
Hewlett-Packard went from 7.4 percent to 8.5 percent, and No. 5 IBM climbed to 8.0 from 7.6, Dataquest said
in a report to be released tomorrow. All but HP saw growth worldwide.
International Data Corporation figures for the first quarter were similar.
Compaq's slippage came during a period of significant expansion in the quantity of PCs being shipped. The U.S.
market grew 24 percent from the first quarter of 1998 to the first quarter of 1999, according to IDC, but
Compaq's growth was a mere 10 percent. Worldwide, sales grew 19 percent, while Compaq saw 16 percent
growth, according to IDC.
In comparison, IBM logged domestic growth of 26 percent, HP 39 percent, Gateway 40 percent, and Dell a
whopping 55 percent, according to IDC.
The Houston PC maker's eroding position lay at the bottom of recent turmoil that culminated in the ouster of chief
executive Eckhard Pfeiffer on April 18. The surprise announcement followed warnings that first-quarter profits
would be half of analysts' projections--which Compaq blamed on weakness in the corporate PC market.
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IBM was a big winner, according to IDC's Roger Kay. "IBM's recovery doesn't particularly show up in the
numbers," because those reflect only unit shipments.
The real boost to IBM's bottom line is that it sold increasing numbers of notebooks and servers, which are fancier
and more profitable machines than desktops. Still, the continuing decline price in PC
prices has eaten some of the gain from these sales, Kay and others have said.
Although IBM and Dell both gained increasing pieces of the global market share, Dell
gained faster and jumped past IBM to take second place. Comparing the first
quarters of 1998 and 1999, Dell's market share increased from 7.8 percent to 10
percent, whereas IBM's increased from 8.1 percent to 8.9 percent, according to
IDC.
HP did better in the United States than it fared globally. The Palo Alto, California,
company's market share slipped from 6.2 percent to 6 percent on below-average
growth of 13.1 percent for its worldwide sales. But Stateside, HP's market share
leapt from 7.4 percent to 8.5 percent with growth nearly double the industry average.
In addition, HP and Dell were the only companies that increased their sales from the
strong fourth quarter to the usually weaker first quarter.
HP's growth came primarily in desktop machines, said spokesman Larry Sennett,
since the company's portable computer business was in the midst of a product
transition.
Apple, meanwhile, had strong iMac and PowerMac G3 sales, with 827,000
computers shipped worldwide, Dataquest said. "Looking forward, future releases of
the iMac and the forthcoming consumer portable should allow Apple to remain strong
throughout the educational buying season."
The top companies continue to hoard more and more of computer sales as the market consolidates, IDC said. In
the first quarter, the top five companies sold 57 percent of all the computers.
U.S. sales grew "dramatically," driven by strong demand for computers aimed at buyers seeking low-cost
computers, IDC said. Intel's new Pentium III chip was popular, according to tomorrow's report, but its arrival
also spurred demand by driving down prices in the older Pentium II lines.
Growth in Western Europe was "healthy," and Japanese sales "showed all signs that region is rebounding from last
year's troubles," IDC said. Dataquest largely concurred, saying that consumer demand in Japan was strong, as
was corporate and government demand elsewhere in Asia.
IDC and Dataquest measure somewhat different markets when they compile their statistics. Dataquest doesn't
include workstations or PC servers, but IDC does.
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