PC Industry Pummeled In First Quarter Of 2001

NEW YORK — PC sales in the United States dropped during the first quarter of 2001 — the first time this has ever occurred — and the worldwide PC market's gains were paltry, according to preliminary reports issued last week by International Data Corp. and Gartner Dataquest.

The two research firms also placed Dell, with 12.8 percent of the market, as the top PC manufacturer worldwide for the first quarter, displacing Compaq for the first time. Dell already held the No. 1 position in the U.S. Compaq and Hewlett-Packard also suffered severe market share drops during the quarter, with each losing more than 20 percent of its share of the U.S. market.

IDC of Framingham, Mass., posted the sales falloff at 9.5 percent, while Dataquest of San Jose, Calif., tallied sales to be 3.5 percent lower compared to the first quarter of 2000. IDC reported 10.4 million PCs shipping, down from 11.5 million, and Dataquest registered 10.9 million, compared to 11.3 million. The discrepancy is due to how the companies measure the data.

IDC's Robert Kay, research manager for PC hardware, said the consumer sales doldrums that affected the end of 2000 carried over into the new year and were compounded by the slowing U.S. economy. This negative consumer situation then bled into the commercial sector to help drag down sales there.

Factors such as the ongoing inventory glut and slow demand for PCs are not likely to be quickly corrected said, Charles Smulders, principle analyst for Dataquest's computing platform group. "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," he said.

Dell continued its domination of the U.S. market with Dataquest and IDC showing the company with 23 percent and 24.2 percent of the market, respectively. Compaq was a distant second on each list with a share of 13.9 percent and 14.4 percent. During the first quarter Compaq shed 17.9 percent of its share, according to Dataquest, and IDC had the loss at over 20 percent.

Rounding out the lists were HP, Gateway and IBM.

Like Compaq, HP suffered a horrific quarter, losing almost 25 percent of its market share, according to IDC and Dataquest. IDC had HP with 10.2 percent of the market on 1.07 million PCs shipped and Dataquest had HP shipping the same number, but gave the company with 10.2 percent of the market.

Gateway did not fare much better, losing around 10 percent of its share. IBM, which no longer sells PCs through retail, was the lone bright spot, gaining almost 19 points during the period.