The burgeoning demand for low-end machines continues, who will be the one to enable them for DVD?
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CI RESEARCH REVEALS HOLIDAY SURPRISES IN RETAIL PC SALES
Compaq Still Dominates Sub-$1,000 Market; HP Takes High-End Lead from
IBM
LA JOLLA, Calif., Dec. 23, 1997 -- For the 1997 holiday season, the time
of year when computer manufacturers battle for the consumer market,
Computer Intelligence (CI), the leading source of fact-based information
about the computer and communications industries, has documented a huge
rise in retail sub-$1,000 desktop PCs and the emergence of a viable
retail notebook product set. CI's data for the holiday season to date is
drawn from its StoreBoard Monthly Channel Survey, which tracks
technology sales through PC Superstores, Consumer Electronics Stores and
Office Products Superstores.
In January 1997, CI noted that sub-$1,000 desktops made up less than 9
percent of the retail desktop market -- the latest CI numbers indicate
that this segment of retail desktops has now grown to 36 percent of the
market, by far the largest price group. CI's data shows a similar
situation for the retail notebook market. At first a nascent market
composed mainly of closeouts, this segment is now booming, with products
specifically designed to meet key consumer price and feature points. The
hottest category is the three-spindle (hard disk, CD-ROM drive and
floppy disk drive) notebook priced between $1,500 and $2,000.
According to CI, these are the winning -- and losing -- PC makers in the
fourth quarter:
Category Who's Hot Who's Not
Low-cost PCs Compaq Acer
High-end PCs Hewlett-Packard IBM
Alternatives to
the Mainstream
Notebooks Gateway 2000 Apple
Low-Cost PCs Compaq Toshiba
In the low-cost PC market, while Packard Bell and Acer have always been
the leaders, they had benefited from an apparent lack of interest in
this segment from many of the larger PC makers, such as Compaq and IBM.
This situation changed in 1997 when Compaq took an aggressive position
with a sub-$1,000 offering that opened up this market for the first
time. CI's data demonstrates that sub-$1,000 PCs quickly accounted for
one-third of the retail desktop market, and Compaq was the vendor
primarily driving the increased volume.
"Compaq's market share in the sub-$1,000 market rose as high as 70
percent in August, and in October Compaq still controlled just over 50
percent," said Matt Sargent, Industry Analyst at Computer Intelligence.
"Packard Bell is rebounding strongly of late, but Acer has been left in
the dust. The dark horse is Hewlett-Packard. While many figured HP
wouldn't be aggressive on price, they're now third and poised to climb
higher."
High-end PCs
The IBM Aptiva had carved out a successful niche in 1996 within the
high-end portion of the retail desktop market, and CI's research shows
that it held onto the No. 3 overall retail desktop position behind
Compaq and Packard Bell, with HP trailing. In 1997, CI research
documents a significant change, and the Aptiva group has fallen from
grace within IBM.
"IBM did not maintain the pace of innovation that is necessary for
success in the high-end consumer market and has lost its position to
HP," said CI Senior Industry Analyst Dave Tremblay. "HP has used a
broader product lineup, better price, and faster innovation to lock up
the No. 3 position in overall retail desktop sales, and now appears to
be the vendor of choice within the high-end market."
Alternatives to the Mainstream
In the past, someone who did not follow the crowd would have most likely
purchased an Apple Macintosh. CI's research shows that the top
alternative PC vendor today is Gateway 2000, the direct mail PC maker
out of South Dakota. In the 3Q 1997 edition of CI's Trendata study,
which interviews 50,000 households per quarter, Gateway 2000 tied with
Packard Bell as the second most popular vendor among U.S. households
purchasing PCs (Compaq was the first choice).
"Consumers had for a long time been wary of purchasing technology
through the mail, but this seems to be changing quickly," said Mark
Nelson, General Manager of CI's Consumer Research Group. "Our data
suggests that the most knowledgeable buyers now purchase through
direct-mail companies and prefer to have the 'inside' track in the PC
purchasing process, rather than work through a middleman whose PC
business may be a small part of his overall business. This new situation
has enabled Gateway 2000 and other direct vendors to become the primary
choice of the smart alternative buyer."
Notebooks
Until fall 1997, the local computer retailer's choices in notebook
computers were typically Toshiba, Toshiba and Toshiba. Toshiba had the
best prices, supply and reseller relationships, all of which caused them
to lead the retail notebook market from its inception in 1994, as CI's
data has detailed, through summer 1997. This dominance ended in
September when Compaq took over the top position in retail notebooks.
Compaq's Presario notebooks are priced lower, have newer technology and
are more focused toward the consumer user.
Computer Intelligence, a division of Ziff-Davis Inc., is the leading
source of fact-based information for the computer and communications
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of products and services that help computer and communications companies
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