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Europeans seen buying more PCs than ever in 1998 (1)
Monday, January 26, 1998 04:54 PM
> By Neil Winton, Science and Technology Correspondent
LONDON, Jan 26 (Reuters) - Europeans will buy more personal computers than ever in 1998,
said British technology research company Context on Monday.
And the biggest four companies in the European market - all American - will consolidate their lead
in 1998 and fatten profit margins, said Emmanuel Lalloz, senior personal computer research analyst
at Context, which published a report on the sector on Friday.
"The PC industry (in Europe) is doing well, there's no reason why 1998 shouldn't be even better.
The consolidation of the big four - Compaq, IBM, Hewlett-Packard, Dell - will continue," Lalloz
told Reuters in an interview.
However, one possible threat to profits comes from Asia, where companies hit by the economic
fallout there might seek to dump personal computers on the European market, Lalloz said.
Context's report showed that western European personal computer sales last year rose 14.5
percent to 19.4 million, their highest level to date. In 1996 sales had risen 11.5 percent. This was
driven by sales to businesses. Consumer sales were disappointing.
Compaq Computer Corp (NYSE:CPQ) , which earlier today announced takeover of fellow
American technology company Digital Equipment Corp (NYSE:DEC) for almost $10 billion, was
market leader with 15.1 percent - up from 12.4 percent in 1996. International Business Machines
Corp (NYSE:IBM) was second with 9.5 percent of the market, followed by Hewlett-Packard Co
(NYSE:HWP) with 6.7 percent, and Dell Computer Corp (NASDAQ:DELL) with 5.8 percent.
The highest-ranked European company was Siemens Nixdorf AG (SNI) (Frankfurt:SIEG) , in fifth
place, with a market share of 5.5 percent.
Context includes notebooks, servers, work stations and desk tops in its definition of personal
computer.
Lalloz said that although the big four would continue to dominate, the next tier of competitors were
also gearing up for a sustained attack on sales.
"The second group of challengers have strong potential for growth too -- companies like Fujitsu Ltd
(Tokyo:6702) , Toshiba Corp (Tokyo:6502) of Japan, Germany's SNI, and (Acer Group) of
Taiwan -- have extremely good products, and prices are coming down," Lalloz said.
"There is an industry worry that Asians will dump as many models as possible at very low prices on
the European market, and that would accelerate the price war that is happening now. There's
always been a price war, it's just gaining momentum," said Lalloz.
Lalloz said that the big four were now turning their attention to profit margins, and trying to organise
their flow of stocks better.
Profit margins on high-end products like servers and work-stations are fat and likely to get fatter,
according to Lalloz
The long promised mass market is still a distant dream for computer makers.
"The technology is still a problem for the mass market. They've (the PC makers) have swamped the
computer freak niche, and those with lots of disposable cash all have computers."
"They will have to rethink how to sell to mass markets."
New technology coming on to the market this year may provide the breakthrough. Chip makers like
Advanced Micro Devices Inc (NYSE:AMD) are providing cheaper chips and starting to make a
dent in Intel Corp's (NASDAQ:INTC) huge market share, and pressurise prices.
Lalloz expects new marketing techniques to appear this year. This will include more leasing, and
guarantees that computers will be upgraded free of charge to keep pace with technological
improvements.
This would take some of the hesitancy from consumers worried that whatever they buy will quickly
become obsolete.
Lalloz said computer buyers wanted a period of calm.
"They want to settle down for a while and let products stabilise. At the end of the day people just
want a product that works. They are fed up with upgrading this and that. Lots of them are still trying
to figure out (Microsoft Corp's (NASDAQ:MSFT) ) Windows 95," Lalloz said.
((Neil Winton +44 171 542 7975; neil@jinks.demon.co.uk)) REUTERS
Quote for referenced ticker symbols: AMD, CPQ, DEC, DELL, Frankfurt:SIEG, HWP, IBM,
INTC, MSFT, Tokyo:6502, Tokyo:6702
c 1998, Reuters |
