Dataquest: '98 'Terrific' Year for PCs

Last year was 'terrific' for the worldwide PC market and that bodes well for the next 12 months, according to market researcher Dataquest Inc.

Last year was "terrific" for the worldwide PC market and that bodes well for the next 12 months, according to market researcher Dataquest Inc.

Total global shipments for PCs hit 92.9 million last year, with 36 million in the U.S. Those robust U.S. unit shipments, along with a strong showing in Europe, pushed the global PC market along, although other regions did not fare as well, said William Schaub, Dataquest vice president for PC computing, who highlighted preliminary figures during a teleconference yesterday.

The U.S. is a good indicator of what will happen globally, so, although other regions had figures that were "not that great" last year, a turnaround is expected, he said.

"I believe this is probably a precursor for demand flows in the world," Schaub said of the 19 percent growth rate in unit shipments registered by the U.S. in 1998. For the fourth quarter of last year, PC unit shipments rose 23.5 percent in the U.S. compared to the year ago quarter.

"Those are terrific numbers," he said.

While consumers aren't likely to be impressed by market figures -- however much analysts and the media might like statistics --, the numbers that do look terrific to buyers are the ever-lower price tags on PCs.

"The industry has done a phenomenal job of bringing affordable PCs to households," Schaub said.

Dataquest analysts created controversy when they predicted two years ago that the PC market would stagnate if vendors didn't do something to push into the home market. Analysts further suggested that vendors needed to make PC prices more affordable or show home users why having a computer is relevant to them.

Besides the price cuts, Internet service providers have boosted the home PC market by helping to show users why it's relevant to be online, Schaub said today. Apparently, the message has gotten out to females, because women are the primary online users in U.S. homes, while young girls now are just as likely as their male counterparts to be logging on, Schaub said.

In the U.S., 37 percent of all households, or more than 100 million, are online.

"That means that the lure of the Internet has truly taken hold," Schaub said, noting that analysts believe the same will start happening in other regions. For example, evidence of vast Internet growth is being seen in Europe, he added.

A central question now, though, is whether "fully functioning PCs" will continue to be the primary device used because personal digital assistants and the like also are coming on strong, he said. However, as long as PC price points stay where they are -- in the under US$1,000 range -- users are likely to opt for computers rather than appliances that provide online access.

As far as hardware vendors go, Compaq Computer Corp. leads globally with nearly 13 million units shipped and annual growth of 20.7 percent from 1997 to 1998.

"That's really fabulous, considering what Compaq has gone through this year," Schaub said, mentioning the major acquisition of Digital Equipment Corp. Compaq appears to have its business model on track, he said.

IBM Corp. is second worldwide with 8.2 percent of the market, but Dell Computer Corp. is closing in quickly with a "spectacular" 65 percent growth rate last year for 7.9 percent of the global market, he said. Hewlett-Packard Co. and Packard Bell NEC Inc. round out the top-five list with 5.8 percent and 4.3 percent market share last year, respectively.

PB NEC actually had negative growth year-to-year, with a 4 percent decline, according to Dataquest. IBM had the lowest growth rate, worldwide and in the U.S., among the other four vendors whose shipment figures were analyzed.

In the U.S., Compaq, Dell, Gateway Inc., IBM and HP are the top five by market share, in that order.

Apple Computer Inc. didn't make either top-five list, despite strong sales of the iMac PC.

"The next two quarters become critical," for Apple, Schaub said, noting that the company needs to broaden its product line to strengthen its appeal.

"Right now, the success for Apple is pretty much a phenomenon that is affecting Apple and not the PC world as such," he said.

Dataquest, a GartnerGroup Inc. division based in San Jose, California, can be reached at +1-408-468-8009 or at http://www.dataquest.com/.

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