PCs: OVERVIEW OF STOREBOARD SEPTEMBER PC SALES
01:04pm EST 4-Nov-97 Prudential Securities (D.YOUNG)
* Storeboard data for the month of September 1997 reveal a continuing strength
in retail PC unit sales, which were up 30% versus 37% and 38% in August and July
respectively.
* The popularity of sub-$1,000 PC's, which ignited retail PC sales early this
year, has stabilized. Storeboard data reveal that sub-$1,000 desktops in the
month of September fell to 27% of retail PC sales from a peak of 39% in August,
which was likely attributable to the back to school selling season.
* Retail ASP's are down from $1,700 at the beginning of the year but have have
stabilized around $1,500 since March. And dealer ASP's have likewise remained
the same since the first quarter at around $2,200.
* Within the retail channel, Compaq (CPQ - $67, rated BUY) retained its
commanding market share lead at 36% in September, while Packard Bell showed
sequential improvement (to 20% from 17%) and IBM (IBM - $101, rated Buy) and
Hewlett Packard (HWP - $63, rated Hold) were both flat. IBM has seen its retail
market share halved since July while HP is down to historical levels from an
uncharacteristically strong July.
* Within the dealer channel, Compaq and IBM both improved sequentially
primarily of the expense of HP and Toshiba.
* On a vendor basis, Compaq was the big winner in retail, while IBM was
surprisingly the winner in dealer as it maintained desktop market share while
building share in notebooks and servers. HP was soft on a broad front.
* The retail PC market has exhibited an elastic response to lower PC pricing
after mostly lethargic results in 1996. And with revenue growth rates of 9% to
11% the past three months (versus flat to down revenues in the first half of
1997) and Pentium II penetration still at less than 3% of retail sales - we
could see a strong Christmas selling season for retail PC's.
*****
Storeboard data for the month of September reveal the continuing strength in the
PC industry. Retail PC sales have surged since early this year with the
popularity of the sub-$1,000 PC. But sales of sub-$1,000 desktop's appear to
have stabilized at around 25% of the retail desktop mix as indicated in the
table below. The peak of sub-$1,000 desktops of 39% in August appears to be
related to the back-to-school selling season, and we could see another spike
like this in December with the Christmas selling season.
While Storeboard data for the dealer channel reveal a year-over-year decline in
unit sales, we place much less faith in Storeboard's dealer tracking than their
retail tracking based on our back testing of the data. For example, Storeboard
data revealed an unsubstantiated decline in dealer unit sales in the months of
April through July 1996 - while the retail data accurately picked up the slow
down in retail PC sales at the end of 1996. On the whole however, we think that
as an analytical tool, StoreBoard is best utilized as an indicator of trends -
and we believe Storeboard is most accurate in indicating market share trends. In
four separate first call notes dated today we examine Storeboard results for
Compaq, IBM, Hewlett Packard and Apple (AAPL - $17, rated Hold).
* Storeboard PC sell-through data for the month of September reveal that Compaq
remains the market share leader in both the dealer and retail channels with
strength in retail and dealer desktops and retail notebooks more than offsetting
share losses in commercial notebooks servers.
*****
* Compaq's retail desktop market share surged beginning in August to 30%+
territory largely on the strength of sub-$1,000 PC's. Compaq's best-selling PC
model overall was the Presario 4504 with a 200 MHz classic Pentium, which sold
over 31 thousand units in September at an ASP of $986. But not all of Compaq's
retail desktop strength came as a result of the sub-$1,000 market - the
company's second best selling PC model overall was the Presario 4508 with a 200
MHx Pentium MMX which sold over 23 thousand units at an ASP of $1,486.
* In the dealer desktop market, Compaq retains the number one unit market share
at 26%, which is up from 23% in August. Compaq's sequential gain came largely
at the expense of Hewlett Packard. Compaq's best-selling commercial PC line was
the low end Deskpro 2000 at 30 thousand units.
* Compaq for the first time became the number one seller of notebooks through
the retail channel, as Toshiba continues to stumble. In the dealer channel,
Compaq's commercial notebook market share at 17% improved from 15% in August but
is at its lowest point since the third quarter of 1996 as IBM's consistent
performance has grown stronger with new product introductions and Toshiba's
market share losses have stabilized.
* Compaq's PC server market share in the dealer channel remains number one at
53%, but ceded considerable share in September to second-place IBM. In the tiny
retail PC server market, Compaq's market-leading 76% share remains
unchallenged.
*****
* Storeboard data for PC sales in September reveals that IBM's U.S market share
in the dealer channel grew to 20%, from 16% in August. Growth was driven
primarily by strong server sales.
* IBM's retail market share in September was flat sequentially at 4%. This
reflects the company's decision to restructure its consumer PC operations
following weakness attributed in part to the absence of a sub-$1000 PC offering.
* In the dealer channel, IBM inched up to 16% market share, from 15%. IBM has
taken nearly one-third of the portables share in the dealer market, up from 22%
in August.
* The stand-out performance came from IBM PC servers, which captured 31% of the
market in September. This shows dramatic improvement from the 10% level
recorded in August.
* Helped by the greater mix of servers, IBM's ASP in September was up both
sequentially and year-over-year, to $2,249, from $1,979 and $2,146,
respectively.
*****
* Storeboard data revealed a weakening trend for HP as the company's printer
and PC market shares were both down and the overall printer market showed
weakness.
* HP's printer revenues fell 11% in September after growing 13% in June, 9% in
July, and 2% in August.
* Total printer industry sell-through slowed in September after a strong surge
in August. Total printer market unit sales grew 13% in September after growing
15% in July and 35% in August.
* In contrast with prior months where HP was maintaining or gaining share in a
weak printer market, HP's market share in September fell to 60% from 67% in
August - though HP still retains more than three times the market share of
second-place Cannon. HP saw weakness in commercial (down 18%) and Laserjets and
Inkjets (up 2% and 5% versus double digits from May through August) and saw
strength in the lower-margined retail sales (up 23%). Multifunction printers
once again grew triple-digits but from a small base and only account for 6% of
HP's unit sales.
* On the PC side, HP's share in the commercial desktop market, its largest PC
market according to Storeboard, fell sequentially in September to 11% and is at
its lowest point in over a year. In the retail desktop market, HP's share
stabilized in August and September after a surge in July and remains above the
levels set in the first half of 1997.
* HP still remains a minor player in the notebook market on both the retail and
dealer sides. HP's commercial server share at 15% has recently lost ground to
second-place IBM, and the company maintains its second place share in the small
retail server market.
* HP's printer performance was better in retail than in the dealer market. And
though we ascribe more confidence to Storeboard's retail sampling than its
dealer sampling - we believe Storeboard is most accurately used to analyze
market share trends - and Storeboard data reveals an uncharacteristic weakening
in HP's printer market share in both the retail and dealer channels. |
