Signs of PC revival in Asia
By Brooke Crothers
Staff Writer, CNET News.com
April 27, 1999, 12:55 p.m. PT
U.S. computer makers are starting to see their sales rise in Asia, a harbinger that spring may be the beginning of a thaw for the region's hibernating economy.
Gateway, Sun Microsystems, and Compaq are among the prominent companies reporting a strong uptick in shipments to Asia.
The turn in computer sales comes as a result of both economic mending in markets such as Japan and, as in the U.S., lower PC prices, according to analysts and executives. Some of the sales growth can be attributed to the fact that the first quarter of 1998 was exceptionally dismal for computer makers. The regional economic crisis was still unfolding. PC makers, meanwhile, were flooded with inventory, leading to unusually low shipments. Nonetheless, regional reports indicate that business and consumer confidence is returning to some degree.
"The end of the Japanese fiscal year, combined with continued high consumer demand, all showed signs that the region is rebounding from last year's troubles," wrote analyst Kitty Fok, research manager for Asia/Pacific at International Data Corporation. "Currency stabilization and low price points drove strong demand in Asia/Pacific [in the first quarter.]"
Gateway last week reported that PC shipments jumped 42 percent during the first quarter of 1999, a number aided by a 96 percent growth rate in Asia. By comparison, worldwide computer sales as a whole grew at about 15 percent.
Compaq has been citing similarly positive developments in Asia. Revenues for Compaq's Asia Pacific region grew more than 20 percent in the first quarter of this year over the same period in 1998 and 8 percent over the previous quarter, said Paul Chan, vice president and managing director of Compaq Computer Asia, speaking to Reuters last week. By contrast, Compaq's overall sales in the first quarter were up 66 percent over the first quarter of last year, but were down 13 percent sequentially.
"It's indicative of the recovery of the economy across the broad segments in Asian countries," Chan told Reuters.
Large-scale computer bellwether Sun has also indicated that Asia is on the mend. Chief executive Scott McNealy described the Asian market as "rebounding" in a conference call after it reported earnings earlier this month. Sun chief financial officer Mike Lehman said Japanese revenues were up 35 percent compared to the same quarter last year.
Sun said revenue increases were strongest in Japan, but also good in Singapore, Australia, and Taiwan.
IBM Asia posted 13 percent constant currency growth. "With IBM the largest U.S.-based PC vendor in Japan, we would suspect that PCs sales were also a positive factor in the region," said Laura Conigliaro of Goldman Sachs.
IBM Japan, a virtual computer powerhouse unto itself, is one of the top three Japanese computer makers and tends to experience a bigger upside when Japanese and other Asian markets improve.
The trend bodes well for the future, according to IDC.
"If market conditions in China, India, and Australia remain healthy, the regional PC market should generate solid gains in 1999 producing the highest annual shipment total to date for the regional market," wrote IDC's Fok.
After a moribund three quarters last year, in the fourth quarter of 1998 PC shipments in Asia/Pacific signaled "a rebound in many regional markets as shipments increased annually for the first time in 1998. Total regional PC shipments amounted to 2.89 million units…which is the highest total ever for the regional PC market."
Japan, the second largest computer market in the world, is showing some of the most encouraging signs and of late is sending out more positive signals than negative ones. For example, sales of PCs at about 20,000 retail stores in Japan have been increasing steadily over the year-earlier period and in the last week of March were up more than 60 percent over the same period in the previous year, according to Fok.
Sales of notebook computers have also been rising in the region. Indeed, much like Japan, China is also showing a ravenous appetite for portable computers. Imports of notebook PCs from Japan, the United States, and Taiwan were valued at about $52 million in 1998, a big increase over 1997, according to a report in AsiaBizTech
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