Gloomy times for PC makers linger on

Amid already-poor sales this year, PC makers suffered through even worse results in June, according to the latest US retail data from NPD Intelect.
Written by Richard Shim, Contributor
Amid already-poor sales this year, PC makers suffered through even worse results in June, according to the latest US retail data from NPD Intelect.

June is part of the traditionally slow second quarter. However, compared with June 2000, unit sales were down 26.5 percent and revenue was down 24.6 percent. The bright spot was average selling prices, which were up slightly from US$849 to US$872.

NPD's data tracks sales through retail stores and does not include sales data from direct sellers, such as Dell Computer and Gateway.

The June figures are part of the overall downward trend afflicting the PC industry. Unit sales totaled 2.5 million in the first half of the year, NPD said, down 19.5 percent from the same period last year. And revenue came in at US$2.5 billion in the first six months of 2001, down 25.5 percent from last year. The trend is likely to continue, NPD analyst Stephen Baker said Friday.

"The outlook for the third quarter looks very poor based on a lack of orders from retailers and manufacturers," he said.

The back-to-school season is likely to turn in results reminiscent of 1998, which will be a disappointment for PC makers hoping to see signs of a turnaround, Baker added.

However, Baker said he remains optimistic for the long term. "There's nowhere to go but up.... We're at the trough, and sales won't go down much more."

PC makers and PC components suppliers have responded to poor sales by lowering prices and taking slimmer margins than they're used to.

One PC maker that apparently is making a convincing argument with consumers is Sony. The company has focused on higher-end PCs, which analysts say has struck a chord with the same consumer crowd attracted to Apple Computer's Macs.

Sony's PC sales in retail stores were up about 400 percent for the first half of the year, compared with the same period last year. Among the reasons for Sony's huge growth are improved distribution and its already small share of the market, Baker said.

Other PC makers did not see such growth.

With the exception of Sony, the top five PC makers recorded sales that were down in the first half of 2001, compared with the same period last year. Market leader Hewlett-Packard's sales were down 16.2 percent; Compaq Computer's were down 18.7 percent; Emachines' sales were down 35 percent; Apple's were down 45.6 percent.

Overall, No 1 HP controlled 42.8 percent of the market. Compaq was No 2 with 34.2 percent. Emachines was in the No 3 slot with 10.4 percent. Apple was No 4 with 4.9 percent. Sony rounded out the top five with 3.9 percent.

While PC sales are down, Baker noted that sales of other consumer products such as MP3 players and digital cameras are strong. The popularity of these products could translate into stronger PC sales, Baker said, if manufacturers can convince consumers that they need to upgrade to a new PC.

"Right now, it seems that consumers want to buy something they don't already have and that is less costly than a PC," he said, "because there isn't a strong reason to buy a new PC."

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