PC market growth at historic low

Economic slowdown and market saturation made for a dismal 2000, says a new report

The world PC market grew far more slowly than expected in the fourth quarter of last year, hit by saturation in the US and Europe and the slowdown of the US economy, according to a new report.

Preliminary PC shipment figures from research firm Gartner Dataquest show worldwide PC shipments totalling only 134.7 million units for 2000, an increase of 14.5 percent over 1999. Worldwide PC shipments increased just 10 percent or 37.9 million units, well below the 17 percent growth Gartner had predicted.

The US market grew by 6.4 percent in the fourth quarter, or 13.2 million units, hit hard by an economic slowdown that coincided with the Christmas shopping season. "The timing of the economic downturn was unfortunate for the industry in the sense that it coincided with the largest home sales quarter, a segment that is typically the fastest to respond to economic uncertainty. However, preliminary estimates also point to a weak professional market performance as well," said Charles Smulders, principal analyst of Gartner Dataquest's Computing Platform Worldwide group, in a statement.

Besides the plunge in dot-com stocks, Gartner analysts also suggested PC saturation in Europe and the US was partly to blame for the sluggish market.

The report caps off weeks of bad news from computer makers such as Apple and Gateway, as well as chip makers AMD and Intel and software maker Microsoft, who have all reported disappointing earnings. Ironically, the current PC slowdown can partly be blamed on the Year 2000 bug, which prompted many businesses to replace their PCs and led to stellar sales for computer makers. Since then there has been less of a business case for PC purchasing, analysts say.

Dell and Hewlett-Packard were the only vendors to beat average industry growth rates both worldwide and in the US, according to the Gartner report. Dell achieved 10.8 percent market share for 2000, 26.9 percent growth over 1999. HP grew 34 percent to gain 7.6 percent of the world PC market. Compaq was still the largest vendor, with 12.8 world market share, having grown 8.4 percent over 1999.

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