Compaq, Dell, and Hewlett-Packard won the battle for worldwide PC market share in the third quarter, as US players consolidated their strength in the global market, according to International Data.
Rankings of the top five players from market researcher Dataquest, of San Jose, California, were the same as those from IDC, differing only in percentage points assigned to each company. Both IDC and Dataquest ranked Compaq, IBM, Dell, HP, and Packard Bell, in order, as the top five players globally.
Though IDC won't release a breakdown by region for another few weeks, this quarter marked the first time that the ranking for the top five PC makers was the same worldwide as they were for the US, noted Roger Kay, a PC analyst at IDC, based in Framingham, Massachusetts. This happened as the top players also consolidated their overall share of the global market.
"This is probably an overused metaphor, but in a few years the PC industry will look like the auto industry ... with four or five players dominating," said Kay. "The fact that the top five U.S. and the top five players worldwide are the same shows that companies like Fujitsu, ICL and NEC have been outpaced by U.S. companies."
Increasingly, size counts, so if a company is already big -- and has advantages of economies of scale like the big US players have -- chances are better that it will be able to keep prices low and thus retain a top ranking, Kay said. Also, the bulk of worldwide supplies of disk drives and processors are manufactured in the US, aiding companies based in the country, Kay said.
Memory, most of which is manufactured in Asia, doesn't have as much of an impact on final PC pricing as it did in years past, he noted. US players also have the advantage of proximity to Intel and Microsoft, which produce, respectively, the de facto standard PC processor and software technology, Kay noted.
In terms of industry consolidation, the Dataquest analysis concurs with that of IDC. The level of consolidation in the US market is unprecedented, according to Dataquest. Almost one in five PCs sold in the US in the third quarter 1997 was a Compaq machine, according to both IDC and Dataquest.
Both Compaq and Dell -- which generated market share gains of 3.4% and 1.5% respectively -- have capitalized on strong ties to Microsoft and Intel as well as channel-assembly programs, where PCs are built to customer order and inventory is reduced, Kay said. HP, which gained 1.7% market share, in addition to launching its own build-to-order efforts, has built up strong corporate services for large customers, Kay added.
Though IBM hung on to second place in the PC-maker rankings, shipping 1.7 million PCs in the quarter, its market share slipped by 0.4%, according to figures from IDC. IBM overhead prevents it from being as nimble and aggressive on prices as some of its rivals, Kay said.
Packard Bell, for its part, has seen its share eroded by price pressure from its top-ranking rivals. In the past few months the company also has been under pressure from investors NEC and Groupe Bull to increase margins and profitability, leaving less room for pricing maneuvers.
The US market in the third quarter grew by 20% year-on-year, from 7 million to 8.4 million PCs, Kay said. Dataquest put the growth figure at 22.9%, and the worldwide growth figure at 16.2%. A global figure wasn't immediately available from IDC.
However, Kay noted that the Japanese market has been soft recently, most likely because of a rigidity in the country's distribution channels. With channels being consolidated among few institutions in Japan, pricing isn't as fluid as in the US he noted. In addition, weakness in the Japanese economy has also undoubtedly affected PC sales, he said.
IDC cross-checks manufacturers' corporate shipment reports with those reported by local officials, Kay noted.
Worldwide PC shipments, 3rd quarter 1997 (IDC):
(Change compared to 3rd quarter 1996)
Company Units (millions) Share Change
Compaq 2.8 14.2 % +3.4 %
IBM 1.7 8.4 % -0.4 %
Dell 1.2 6.2 % +1.5 %
HP 1.1 5.8 % +1.7 %
Packard Bell 1.0 5.1 % -0.8 %