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Dell Grabs Lead In U.S. PC Sales From Compaq For The First TimeUpdated 8:19 PM ET October 24, 1999
By David P. Hamilton, Staff Reporter of The Wall Street Journal
Dell Computer Corp. outsold longtime leader Compaq Computer Corp. in the U.S. personal-computer market in the third quarter, according to studies by two market-research firms.
The studies, to be released Monday, show a broad-based boom in PC sales. But the strongest performer was Dell, which roared to 58% unit-sales growth in the U.S. segment, boosting its share of that market to 18% from 14% a year earlier, according to International Data Corp., Framingham, Mass. Compaq, by contrast, saw its unit shipments rise by 24%, and its market share remained roughly flat at 16%.
The third quarter marks the first time analysts from either IDC or Dataquest Inc., a unit of Gartner Group Inc., could remember Dell seizing the U.S. lead from Compaq, which still is No. 1 on a global basis. Still, the results weren't particularly surprising, given Dell's global sales momentum and some recent stumbles from Compaq. In particular, Dell's new position reflects the Round Rock, Texas, company's dominance of the U.S. corporate PC market, where it has generally been able to offer lower prices and better service than Compaq, thanks to its direct-sales model.
"This is something that's been in the works for quite a long time," said IDC analyst John Brown. "Dell just finally pulled it all together in the U.S."
While Mr. Brown remains bullish on Dell's prospects, his counterpart at Dataquest cautioned that its surge could be short-lived. "The fourth quarter is more difficult for Dell," because Compaq can play to its strengths in the consumer market over the Christmas season, said Dataquest analyst Charles Smulders. "The effect of those shipments in the consumer market might save Compaq."
Overall, world-wide PC sales rose by more than 20% in the quarter from a year earlier. Dataquest said global PC shipments rose by 23% to 28.6 million from 23.2 million a year earlier. IDC pegged that growth figure at 25%. Results from the two companies often vary slightly due to methodological differences.
Houston-based Compaq's global lead is narrowing. In the third quarter, Compaq's world-wide shipments grew by 18%, according to Dataquest, causing its market share to slip by 0.6 percentage point to roughly 13%. Dell, by contrast, jumped to an 11% share from 8% a year earlier, thanks to a 62% increase in unit shipments.
Sales were strong across all major regions but were particularly robust in Asia. According to IDC, PC shipments in Japan jumped by 37% from the year-earlier quarter, reflecting a nascent recovery there, and rose by 38% in the rest of Asia. U.S. sales rose by 23%; Europe lagged behind, with a 16% increase in shipments.
Those results largely reflect lower PC prices world-wide as well as continued demand for Internet access. To Mr. Smulders, the steady demand was particularly remarkable given higher prices for memory chips and other major PC components during the quarter -- rises that were the result of supply-demand imbalances and the effects of a recent earthquake in Taiwan. Mr. Smulders, however, argued that such shortages will likely be temporary, and should work themselves out by early next year.
Several other top-tier PC manufacturers struggled during the quarter. International Business Machines Corp. retained its third-place position in the global rankings, according to IDC, but slipped to an 8.1% share from 9.1% a year earlier. Hewlett-Packard Co., in fourth place, managed to marginally improve its market share to 6.7% from 6.6%.
But Japan's NEC Corp., which includes its U.S. subsidiary Packard Bell NEC, dropped to a 4.9% share from 6.5% a year earlier, according to IDC. NEC, in fact, was the only PC maker in IDC's top five whose unit shipments fell compared with the year-earlier quarter, in this case by 6%.
Dataquest's results paralleled those of IDC with one exception: It reckons the No. 5 PC maker was direct seller Gateway Inc., whose shipments rose by 40%, fueling a rise in its market share to 4.3% from 3.8%.
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