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PC sales strong in 1Q
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April 24, 2000: 4:22 p.m. ET
Research firms report double-digit sales growth; citing consumer demand
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NEW YORK (CNNfn) - Personal computer sales during the first three months of 2000 continued to be strong, due in large part to an economic recovery in Asia and robust demand from consumers, according to two leading technology research firms.
Dataquest Inc., based in San Jose, Calif., and International Data Corp., based in Framingham, Mass., each released reports Monday indicating that PC manufacturers shipped roughly 30 million units worldwide during the first quarter of the year.
By Dataquest's count, that's a 15 percent year-over-year increase. IDC numbers the increase at 20 percent.
Healthy consumer demand and a strengthening of the economies in several Asian countries, especially Korea and Japan, helped to offset sluggish corporate demand ahead of the millennium changeover, both firms said.
 In the United States, Dataquest said 11.1 million PCs were sold, up 14.5 percent from last year. Meanwhile, IDC recorded U.S. sales of 11.6 million PCs, a 17 percent increase.
Both firms showed Dell (DELL: Research, Estimates) just slightly edging out Compaq (CPQ: Research, Estimates) for the leading position in U.S. sales, and eMachines (EEEE: Research, Estimates) and Hewlett-Packard (HWP: Research, Estimates) posting the highest growth rate.
Meanwhile, IBM (IBM: Research, Estimates) fell out of the top five list of U.S. PC sellers, due in part to its decision to withdraw from the consumer market as well as a slowdown in sales to business customers ahead of the millennium changeover, according to IDC.
 Most large businesses deferred their technology spending in late 1999 until the new year to avoid potential "Y2K" problems, which were expected to prevent some systems from operating properly because they would not be able to distinguish the year 2000 from 1999.
"The greatest effect on IBM during this period is the withdrawal from U.S. retail of the Aptiva desktops," said IDC analyst Roger Kay. "Those represent large unit volumes, even if they weren't profitable, and if they cut that back, you will see a lot of unit share loss."
IBM's global PC sales fell 14 percent from the corresponding period last year, according to IDC's research.
Meanwhile, Hewlett-Packard's strong performance was boosted in large part by IBM's decision to withdraw from the consumer market, according to Kay. At 56 percent, the company posted the highest year-over-year growth rate of all the PC vendors on IDC's list.
"I suspect that the HP surge ... is essentially the result of it moving forward smartly in the U.S. consumer space and taking up the share left by IBM, and also by the other vendors that left U.S. retail in 1999," Kay said.
Acer and NEC also exited the U.S. retail PC market in 1999.
For all of 2000, IDC is forecasting year-over-year PC sales growth of 20 percent, with much of that coming from Asia. Dataquest sees worldwide sales growth of 17.4 percent for the year.
However, both firms warned of a longer-term leveling off of growth in the U.S. market.
"In the United States, installed-base saturation is becoming an increasingly significant factor in determining overall commercial market growth rates," said Charles Smulders, principal analyst for Dataquest's PC group. "Saturation is forcing vendors to deliver new types of systems to maintain solid growth rates."
Smulders said PC makers will need to focus on low-cost, small-form factor computers such as Compaq's "iPAQ" and HP's "e-Vectra," if they are to continue to grow in the U.S. market.
"The market's reaching maturity," said IDC's Kay. "I see a zero-growth scenario out around 2005 or 2006."
"That's not necessarily a bad thing," Kay added. "If you look at the auto industry, Detroit is in virtually the same situation it's been in for the last 30 years. There's not a lot of car growth in terms of actual unit sales, but they enhance revenue by adding features. That's something that up until now has not been accepted in the PC industry." 
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