To ALL: Dell, Austin, took the No. 2 spot from IBM Corp., with a 40 percent increase in revenue to $11.5 billion.
From Comtex
tscn.com
Sorry if it has been posted, but just to make us feel good for the coming Tuesday
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5/15/99 - Desktop PCs -- Compaq maintains leadership and market share
May. 14, 1999 (Computer Reseller News - CMP via COMTEX) -- Compaq Computer Corp. continued to dominate the corporate desktop market in 1998, but Dell Computer Corp. closed the gap. Houston based Compaq saw its desktop revenue climb 12 percent to $15.9 billion in 1998, up from $14.2-billion the previous year, according to Dataquest, San Jose, Calif. Compaq's market share nudged up to 14.1 percent in 1998 from 12 percent in 1997. Ed Ellett, Compaq's vice president of North American PC product marketing, attributed the company's growth to successful product transitions. Compaq in 1998 phased out its Deskpro 2000, 4000 and 6000 desktop lines and replaced them with the Deskpro EN and EP-the former aimed at corporate customers counting on stability and the latter for those requiring the
latest technologies. "Most of the time, product transitions are where competitors lose their momentum, and it's the reason you hear me emphasizing transitions because that is where you can lose customers," Ellett said. "We did the transitions very well in the enterprise." Compaq directed products and advertising to two types of users: major accounts and price-sensitive customers. "For the price-sensitive customer, we had some models down in the sub-$1,000 category, which led to some very strong sales out," Ellett said.
Dell, Austin, took the No. 2 spot from IBM Corp., with a 40 percent increase in revenue to $11.5 billion.Platform stability gave Dell its edge, said Bill Peterson, the company's director of product marketing for the OptiPlex desktop line."In the corporate world, the lack of stability can be a major frustation," Peterson said. "They want to be able to buy essentially the same machine as they did a quarter or a year ago. We work to deliver that level of stability."
IBM, Armonk, N.Y., yielded market share in desktops to the other market leaders and wound up No. 3. Its revenue dropped to $8.8 billion last year, down 17 percent from $10.7 billion. IBM's revenue decline was not the whole story. The company disclosed that its PC division lost nearly $1 billion in 1998, even while the company as a whole made gains. "It wouldn't surprise me if IBM eventually just gave PCs away to secure lucrative, services-rich contracts," said Lindy Lesperance, analyst with Technology Business Research, Hampton, N.H.
IBM's loss was Hewlett-Packard Co.'s gain. HP, Palo Alto, Calif., grew its desktop business 11 percent last year, ranking No. 4 with $8.4-billion in revenue. HP streamlined distribution in late 1997 and early 1998, insulating it from inventory
problems that plagued Compaq early last year, HP officials said.
Gateway Inc., San Diego, No. 5, had a weak first half but came back strong in the third and fourth quarters, winding up the year with $5.1-billion in desktop sales, up 1 percent from the prior year. The company's Country Store approach to the small-business market contributed to the strong second half, said William Schaub, a Dataquest analyst. "The Country Stores appear to be a nice complement to their business and success," he said. Phyllis McCullagh, vice president of Gateway Partners and Gateway corporate sales, also attributed gains to a greater reliance on VARs. The company adopted a customer choice model for customers more comfortable with using VARs, she said.
Despite industrywide gains, Schaub said, the market for daily users of PCs is saturated. "We are truly at a replacement stage for that portion of the market," he said. This is a crucial time for the industry, he said. Vendors are facing soft sales overseas and a slowdown in the domestic market."The challenge then for the commercial marketplace is to have the kind of double-digit growth rate the industry expects," Schaub said. "We need to find ways and methods to maybe step up the replacement cycle."
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By: Joe Wilcox
Copyright 1999 CMP Media Inc.
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