Just a little news--
By Eric Auchard
NEW YORK, July 26 (Reuters) - Dell Computer Corp. <DELL.O>
has capitalized on Compaq Computer Corp.'s <CPQ.N> ongoing
turmoil to surge into a nearly neck-and-neck tie for No. 1
supplier of personal computers in the United States, but Compaq
held on to a generous lead worldwide, recent surveys showed.
The battle for market share took place as global shipments
of PCs grew nearly 27 percent to 25 million units during the
second quarter, in the wake of a broad recovery in the world's
major geographic regions and amid strong consumer PC demand.
Second-quarter market statistics compiled by research firms
Dataquest and International Data Corp. (IDC) showed Compaq
narrowly retaining its U.S. lead over direct PC supplier Dell
-- but only by a fraction of a percentage point.
Dataquest counted Compaq with 16.8 percent of PC shipments
in the United States, against Dell's 16.4 percent. IDC put
Houston-based Compaq at 16.6 percent versus 16.3 percent for
Round Rock, Texas-based Dell. The estimates varied due to
slight variations in what the two research groups classify as
PCs.
"Dell is actually in a prime position to take advantage of
weakness at Compaq," said John Brown, a PC industry analyst at
Framingham, Mass.-based IDC. "There is nothing right now to
show that Dell is slowing down."
Dell, the top supplier of direct-from-the-factory,
custom-configured PCs, is cashing in on growing demand for
direct sales via the Internet. But Compaq has struggled to meet
the direct demand while continuing to rely on indirect PC
distribution to businesses and through retailers to consumers.
"Everything is going in the right direction for Dell to
take advantage of any further slippage at Compaq," Brown said,
noting Compaq shipped an estimated 1.80 million PCs in the
United States in the 1999 second quarter, versus Dell's 1.77
million.
Compaq is working to simplify its distribution strategy but
has been distracted by the house cleaning of its top executive
team during the past three months, leading analysts to believe
that Dell may see further gains heading into the fall.
"Certainly there is the potential for Dell to overtake
Compaq in the third quarter," Charles Smulders, a PC
distribution analyst at Dataquest in San Jose, Calif., said of
the battle for the rank of top PC maker.
Still, in the latest quarter, Compaq remained No. 1
worldwide with 13.8 percent of the market, compared with Dell's
10.2 percent, Dataquest said. But the numbers showed strong
sequential gains for fast-growing Dell. IDC put Compaq with
14.6 percent globally against Dell's 10.8 percent.
Compaq has been the No. 1 PC maker in the world since 1994,
when it swept ahead of International Business Machines Corp.
<IBM.N> and Apple Computer Inc. <AAPL.O> from No. 3 in 1993.
Worldwide volume growth was led by the United States, where
the market expanded a robust 35.3 percent to 10.8 million units
in the latest quarter, driven by a growing fervor for low-cost
consumer PCs and "nearly free" PCs subsidized by Internet use.
Consumer PC demand swelled the Japanese marketplace, which
rang up the highest year-on-year second-quarter growth of any
region worldwide, IDC said. Healthy commercial PC sales offset
seasonally typical slow consumer demand in Western Europe.
Strength in Britain and France met German weakness.
The top five vendors outpaced the industry worldwide by
growing in excess of 30 percent -- led by Dell, with better
than 50 percent growth, and IBM, with just under 50 percent --
as major brands once again took share from lesser-known names.
The explosive growth in percentage terms was in part due to
favorable comparisons with the year-ago second quarter, when
leading PC vendors scaled back shipments in order to work off a
glut of PC inventory that built up in the first half of 1998.
As a result, shipment growth in the second quarter of 1999
looked higher than the growth in actual sales that occurred to
computer users during the quarter.
Filling out the top five spots were International Business
Machines Corp. <IBM.N>, at No. 3 worldwide, followed by
Hewlett-Packard Co. <HWP.N> at No. 4 and Gateway Inc. <GTW.N>
at No. 5, Dataquest said. IDC showed Japan's NEC Corp.<6701.T>,
with its flagging U.S. unit Packard Bell/NEC, holding the No. 5
spot.
But in the United States, IBM, Gateway and Hewlett-Packard
were in a tight battle for the No. 3 spot, the surveys agreed.
IBM led here, according to IDC, while Gateway was slightly
ahead by Dataquest's count. The differences reflect how IDC
counts some computer servers and workstations that Dataquest
does not.
The figures tell only a partial story, however, since the
industry researcher firms track shipments and not revenues.
Tumbling computer prices have cut into the revenue growth, not
to mention the profitability of every computer maker.
In response, many PC makers are seeking to make money
beyond the PC box itself, roping consumers in with
Internet-access offers and by selling accessories like printers
and monitors.
Dataquest's Smulders said that while shipments are expected
to grow around 18 percent this year, revenues are estimated to
rise by a paltry 5 percent -- reflecting sales of low-cost
consumer PCs that buoy unit numbers but add little to revenue.
((-- Eric Auchard, New York Newsdesk, 212-859-1840))
REUTERS
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