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News > Technology
PC makers trip at finish
January 19, 2001: 2:47 p.m. ET

Preliminary data confirm lackluster growth for 4Q, year
By Staff Writer Richard Richtmyer
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NEW YORK (CNNfn) - Two leading technology research firms on Friday confirmed what Wall Street has suspected for months: fears about a weakening U.S. economy led to a drastic slowdown in PC sales growth during the fourth quarter and resulted in only lackluster growth for all of 2000.

The slowdown was seen the most in the U.S., where vendors shipped roughly 49.4 million units in 2000, according to Gartner Dataquest, a research firm in Stamford, Conn.

That amounts to a 10.3 percent annual increase and is less than half the 21.7 percent increase in shipments they posted during 1999.

Worldwide, PC makers shipped 134.8 million units in 200, a 14.5 percent increase. That's sharply below the 23.3 percent increase in shipments the industry logged in 1999.

Charles Smulders, PC analyst at Dataquest, blamed the slowdown primarily on market saturation and deteriorating consumer confidence in the U.S. and world economies, which became especially evident in the fourth quarter.

"The downturn in growth is concrete evidence that saturation in key segments is playing an increasingly important role in overall market growth, with new shipments unable to mask the effects of economic cycles on replacement buying," Smulders said. graphic

PC vendors capped off the year with what was one of the worst fourth quarters in recent memory. One after the other, they added their names to the list of technology outfits that told the Street they would fall shy of their quarterly financial targets, pinning the blame primarily on uncharacteristically weak consumer sales in the U.S.

Fourth-quarter PC-unit shipments in the U.S. totaled just over 12.5 million, a mere fraction of a percent over the 12.5 million units recorded during the fourth quarter a year earlier, according to preliminary figures from International Data Corp., a research firm in Framingham, Mass.

"The U.S. numbers are looking pretty poor," said Roger Kay, manager of IDC's PC program. "They came in well below what we had been forecasting before."

Fourth-quarter PC-unit shipments in Europe also fell well short of IDC's expectations, while sales in the Asia-Pacific region came in only slightly below its forecasts, Kay said.

Economic worries that caused consumers to be more conservative and a lack of any compelling reason for current PC owners to upgrade their systems were largely to blame for the slowdown in the U.S. and Europe, which became especially pronounced in the latter half of the quarter, Kay said.

But while the lower growth rates made for a disappointing fourth quarter and prompted investors to punish PC makers' stocks, Smulders said the results should allay some of the fears about a buildup of inventory moving into the first quarter of 2001.

"This is better news for the industry, both because it suggests that vendors were able to take some action to stem and reduce the buildup evident in the early part of the quarter, and the anticipated sell-off of excess finished goods' impact on 2001 first-quarter shipments should be less pronounced," he said.

Dell maintains U.S. lead, closes gap on Compaq

According to Dataquest's full-year figures,  Dell Computer (DELL: Research, Estimates), the leading PC vendor in the U.S., continued to close the gap on Compaq (CPQ: Research, Estimates), which maintained a narrow lead in the global market.

By Dataquest's count, Dell shipped 14.5 million units worldwide in the fourth quarter. That's up 27 percent from the same period a year earlier and gives it 10.8 percent of the global market share.

At the same time, Compaq's shipments rose just 8 percent from 1999, giving it 12.8 percent of the worldwide PC market, according to Dataquest.


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In the U.S., Compaq's market share slipped to 15.4 percent from 16.1 percent, while Dell bolstered its position as the leading PC supplier in the U.S. Its share of the market for the year rose to 19.1 percent from 16.2 percent in 1999, Dataquest reported.

Smulders pointed out that Dell and Hewlett-Packard  (HWP: Research, Estimates) were the only two top-tier PC vendors to post annual growth rates above the industry average, both in the U.S. and worldwide.

He said some of Dell's success was attributed to its aggressive pricing strategy during the fourth quarter, while HP was able to maintain its momentum by leveraging its strong consumer franchise and solid support of the retail channel. graphic





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