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Hopes of PC market recovery dashed

Dell close to overtaking HP in becalmed sector

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Hopes of a recovery in the PC market have been dashed; IDC reports that worldwide PC shipments were down 0.5% from 31.2 million in Q2 2001 to 31.1 million in the second quarter this year.

It's the fifth consecutive decline in PC shipments, the analysts note.

IDC had predicted that Q2 shipments would rise by 1.3 per cent this quarter, and although the rate of decline has eased from a drop of 7.8 per cent in Q1, this is cold comfort for the beleaguered system builders.

The consumer market is "becalmed", IDC reports, with the introduction of Windows XP and Intel's Pentium 4 failing to stimulate sales into Q2. The commercial faired better, but only just.

HP, thanks to the Compaq merger, has assumed top spot in the PC market, but with combined sales down 16.5 per cent on Q2 2002 against an overall decline of 0.5 per cent, IDC reports that HP will need to focus on its PC business to remain ahead of Dell, which enjoys a share of 14.8 per cent of the market compared to HP's 15.1 per cent.

IDC reports that Dell's US shipments increased by more than 19 per cent in the second quarter, as the company took share from competitors - particularly in the consumer and education segments. Overall Dell shipped 4,600,000 PCs, up 15.5 per cent on the 3,983,000 units it moved in Q2 2001.

IBM's sales held up in the US, but it lost ground internationally as businesses (its main market) continued to defer spending.

Fujitsu also suffered from a weak commercial market. Meanwhile, Gateway "continues to suffer from a cautious consumer segment and fierce competition from rivals", IDC notes.

Despite a loss of momentum in flat panel iMac's, Apple's total shipments increased slightly in a tough U.S. market. Still, with shipments declining in Japan and Western Europe, the company was more cautious about its prospects for the third quarter despite the traditional education spending.

The World Cup effect

Second tier vendors were worst effected by difficult market conditions during but sales by white box vendors held up. One of the few bright spots in the market was notepad sales in Europe, while consumer sales in Asia feel because consumers were distracted by the World Cup, IDC notes.

The "World Cup" effect, where business and consumers put off spending on IT to concentrate on the footy was also noted during France 98, and blamed by some enterprise vendors in Europe for failing to meet US defined targets.

But we digress.

IDC hopes for improvements ahead, with sales to the education sector and traditional holiday sales giving hopes that its forecast of single digit growth in 2002 will be met, but the fragile state of the economy and "uncertain political outlook" remain concerns.

"The fundamental drivers of a recovery are still in place - increasing economic stability if not improvement, an ageing installed base, and continuing technology development - however, both consumers and businesses are still very cautious about investing, said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker.

"We still expect seasonal improvement in the second half, although the current results underscore the fragile state of the market," he added. ®

External Links

IDC's market survey (Q2 2002)

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