PC shipments show renewed growth

A leading market researcher says consumer sales are powering the PC market.

Despite some early predictions to the contrary, 1999 is shaping up to be a very good year for PC makers.

International Data Corp. of Framingham, Mass., is predicting growth of nearly 25 percent year-over-year for the worldwide PC market in the third quarter of 1999.

IDC, which today announced its final second-quarter market share numbers, expects third-quarter sales to rise about 7 percent from the second quarter of this year.

With the PC market, especially the consumer segment, showing strong growth, concerns about the Year 2000 slowing sales have not been realized. Y2K fears, IDC says, will likely not affect PC sales in the United States.

"Purchasing has not slowed down because of [Y2K] in the U.S.," said John Brown, an IDC research manager for the company's worldwide quarterly PC tracking. It may, however, affect some other markets, such as Japan. "At the end of Q3 going into Q4, we're going to see some slowdown on the business side there," he said.

Y2K not a factor
The consumer market may erase any financial problems that Y2K fears might cause. "Y2K is totally being overshadowed by the consumer market," Brown said. "Retail sales have been strong."

Contributing to retail's strength are low-cost PCs and rebate programs recently launched by Internet service providers, which have helped increase unit volumes of low-cost PC makers, such as eMachines Inc., he said.

While the worldwide market is expected to grow by 24.8 percent in the third quarter, many geographical areas will grow at a much faster rate.

Those areas include Japan, which has a projected year-over-year growth of 32 percent. The Asia/Pacific region, excluding Japan, is expected to grow at the even faster pace of 34 percent.

Meanwhile, the United States is expected to see 28 percent growth. Western Europe, IDC predicts, will grow at about 16 percent.

While the markets will increase, important factors for individual PC makers' growth in the third quarter will include plans to address the consumer and small-business markets, the delivery of notebook PCs in volume, and solid Internet strategies, according to IDC's predictions.

For worldwide growth, a PC company must have a strong position in the United States', European and Asian markets, according to IDC.

The 'right stuff'
Companies that have the "right stuff" to grow are Dell Computer Corp. (Nasdaq:DELL), Gateway Inc. (Nasdaq:GTW), IBM Corp. (Nasdaq:IBM) and Apple Computer Inc. (Nasdaq:AAPL), according to IDC.

Dell, which reached No. 1 in market share in the United States in the second quarter, has been surging ahead.

"They've been basically neck and neck with Compaq. We're calling it a virtual tie," Brown said.

However, he added, "Dell hasn't slowed down. (The company) is doing a good job of staying ahead of itself, instead of ahead of the market."

While Compaq Computer Corp.'s consumer lineup is doing well, its business PC sales have faced tougher times, losing some bids, Brown said. IDC will watch for Compaq (Nasdaq:AAPL) to improve in the third quarter, based on its latest round of executive changes, he said.

Apple is back
Apple is also "back on the radar screen ... and not just here in the U.S., but internationally," Brown said. The iBook, Apple's recently announced portable, and its new G4 systems are expected to help the company hold its own in the third quarter.

Due to the current state of competition in the market, "If you can hold your ground, others around you will crumble and move you up," Brown said.


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