Dell Just Became The Highest PC Seller

Compaq dethroned; overall U.S. PC sales dip 3.5 percent

Amid an international downturn in personal computer sales, Dell (DELL, info) has gained enough market share to dethrone Compaq (CPQ, info) as the world’s leading PC seller, according to the preliminary results of the newest study by Dataquest, a unit of Gartner Group (IT, info).

Overall PC sales in the United States fell 3.5 percent from the same period a year ago, due to the sluggish economy and a saturated market, the study said.

The slowdown in U.S. PC sales was also due to overloaded inventories from the fourth quarter, which made first-quarter shipments shrink, Gartner found. The United States wasn’t alone in its slow pace, as European growth was only 3.5 percent.

“The effects of the U.S. economic slowdown are beginning to spill over into other regions as shown [by] their slowing growth, with the 3.5 percent world growth being the slowest since we began compiling statistics,” Todd Kort, principal analyst of Dataquest’s Computing Platform Worldwide group, said in a statement.

The study said Dell captured 12.8 percent of the worldwide market with 4.2 million unit shipments, while Compaq fell to a 12.1 percent share with shipments of 3.9 million. A year ago, Dell had only 9.9 percent market share, while Compaq led with 12.5.

“This is a milestone for our company and our people, and we’re rightfully proud, but the greatest opportunities for customers and for Dell are still ahead of us,” founder Michael Dell said in a statement. The company showed particular first-quarter strength in servers, storage products, and notebook computers.

Dell, which has been the leading PC maker in the United States for the past eight years, only took the No. 2 global sales slot from IBM two years ago, Dell said.

Hewlett-Packard (HWP, info) remained in third place, with 7.3 percent market share on shipments of 2.4 million, compared with 7.9 percent and 2.5 million shipments a year ago. On the fourth rung, IBM (IBM, info) had 6.2 percent share with 2 million shipments, followed by NEC (NIPNY, info) with 4.5 percent share and 1.5 million shipments. The remaining 32.5 million units were sold by smaller PC makers.

In its findings, Gartner noted that Dell has the most efficient supply chain, which allowed it to pass on component price savings to customers faster.

Dell saw a 34.3 percent growth rate during the first quarter. IBM was the only other major player to come close to that, with a 7 percent growth rate.

For the U.S. market, Dell controlled 23 percent of the market, while both Compaq and Hewlett-Packard lost market share due to excess inventory issues. Gateway (GTW, info), which on Thursday posted a first-quarter loss of $503 million and took charges of $533 million, also lost market share.

In the United States, Compaq held 13.9 percent market share, followed by HP with 9.8 percent, Gateway with 8.5 percent, and IBM with 5.2 percent. Other vendors combined to account for the remaining 39.5 percent of the market.

Most computer makers have had difficult times meeting Wall Street expectations this year. Earlier this week, HP said it sees its second-quarter revenue falling 2 percent to 4 percent and that it will cut up to 3,000 jobs.

“Even if component inventories were in balance with demand, saturation in the U.S. and parts of Europe is an issue that is clearly not going to go away, and vendors and the industry must look for ways to maintain revenue opportunities,” Charles Smulders, principal analyst of Dataquest’s Computing Platform Worldwide group, said in a statement.

“Most PC vendors recognize saturation but prefer not to greatly alter well-tested product and marketing formulas. International expansion is considered by most to be a strong enough remedy,” he noted.

Posted by on April 20, 2001