Tough times for PC firms

Manufacturers are having trouble persuading people to purchase PCs

By BBC News Online technology correspondent Mark Ward

For the first time, there has been a drop in the number of personal computers shipped in Europe.

Ever since the PC was invented, nearly 20 years ago, the number of machines distributed and sold in Europe has grown steadily, month by month.

But market research by Gartner Dataquest has revealed that shipments slumped in the second three months of 2001, indicating that the tough times for technology companies are not over.

The report suggests that shipments, and subsequent sales, will not improve before the end of the year.

Computer crash

The failure of faith in dot.coms, slumping share prices and the threat of recession have all conspired to make business very difficult for technology companies in the US and now Europe.

Key figures

Home shipments: -15.4%

Office shipments: +5.7%

Total: -4%

Gartner Dataquest has found strong evidence for the downturn in Europe as, for the first time ever, it has recorded a decline in the number of PCs shipped to European homes and firms. While shipments do not correspond exactly to sales, a drop in the former is usually followed by a fall in the latter.

The research revealed that a total of 6.02 million PCs were shipped in Europe between April and June this year, 4% less than during the same period last year, and 18% down on the first three months of the year.

Brian Gammage, principal analyst at Gartner, said the decline was due to a collapse in shipments and sales to home users, which slumped by 15.4%.

He said PC makers were to blame for the slump because, over the past few months, they had used promotions, marketing campaigns and price cuts to boost sales to artificially high levels.

The result now is that there is almost no-one left to whom a computer can be sold. "If you do not need a PC, you do not need it at any price," he said.

Business boost

But the news from the Gartner research is not all bad. Although sales to home users are crashing, other segments of the market look quite healthy. Over the same three-month time period, shipments to businesses, which account for more than three-quarters of the market, grew by 5.7%.

Key countries

Germany: -11.9%

UK: -7.3%

France: +7.8%

Russia: +38%

Mr Gammage said the PC makers doing well out of this growth were those with a clear idea of how to deal with the difficult conditions. PC makers following such a course, such as Hewlett Packard, IBM and Dell, were picking up orders at the expense of rivals.

He warned that trading conditions were unlikely to improve before the end of the year because many companies were waiting until Intel's relatively new P4 chip was well established.

Mr Gammage also said the debut of Windows XP was unlikely to drive many sales or shipments because many people were happy with the power of their machine, and they only tended to upgrade operating system when they bought a new PC.