BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Sunday, 20 January, 2002, 09:34 GMT
Global PC sales slump
Last year was the worst in the history of the computer industry, as the slowing global economy battered PC sales around the world.

Global PC sales ('000 units)
Dell, 4,863
Compaq, 3,827
HP, 2,722
IBM, 2,110
Fujitsu-Siemens, 1,674
Others: 19,036

Data: October to December
Source: IDC

Reports from consultants Gartner Dataquest and International Data Corporation (IDC) have shown that the decline in computer shipments last year was the heaviest since the mid-1980s, when the industry was in its infancy.

In the US, where consumer sentiment has been battered most severely by the effects of 11 September, sales fell by 10-11% year on year.

But relatively healthy figures towards the end of the year offered some signs of hope for a recovery, both analysts said.

As if to underline the positive feeling, PC market leader Dell has also raised its revenue and earnings forecasts for the fourth quarter.

Falling down

The two reports differed in some details, but painted the same picture.

Sales fell dramatically last year - by 4.6% over the year as a whole, Gartner said.

According to IDC, sales in the last three months of 2001 were 6.7% lower than a year before.

In the US, sales fell 11.1% by Gartner's reckoning, or 10.1% by IDC's.

According to Brian Gammage, principal analyst at Gartner, the slump was the result of the economic slowdown coming precisely at a time when consumers' need continually to upgrade their PCs was on the wane.

Improvements in processing power have meant that even basic PCs can perform beyond most users' requirements, Mr Gammage said.

Until recently, industry optimists were predicting that PC demand would double annually indefinitely.

Now, Mr Gammage said, the market was likely to grow by a single-figure digit, even once the economic effects had been stripped away.

Dell's delight

Nor has the slump been distributed evenly among manufacturers.

The only major PC maker to boost both sales and market share was US giant Dell, which now accounts for 13-14% of global shipments.

Rivals, such as Compaq, Hewlett-Packard and IBM, suffered considerable year-on-year declines in sales.

Compaq, for example, sold 3.8 million computers in the last three months of last year, compared with 4.7 million in the same period of 2000.

Dell has now raised its sales estimates for the current quarter - ending on 1 February - to $8bn, from the previous $7.6bn.

The company is working on shipment growth targets of 40-50%, way in excess of overall growth for the PC market.

Turnaround time

Both Gartner and IDC also insisted that there were grounds for optimism.

Although sales fell in the fourth quarter on an annual basis, they showed strong quarter-on-quarter growth - 16.9%, according to IDC.

This indicates that the 11 September effect may only have been short-lived, analysts say.

According to the optimistic scenario, purchases of PCs, especially by companies, may only have been postponed, rather than cancelled, in the last six months of 2001.

The key indicator here is employment, since staff numbers tally extremely closely with corporate demand for workstations, Mr Gammage said.

Since 11 September, unemployment rates throughout the developed world have risen slightly, but not as catastrophically as some had predicted.

Prices plunge

Less favourable for PC makers is the fact that unit sales of computers disguise the heavy discounts at which many are selling.

Dell's success in 2001 was based largely on an aggressive pricing policy, introduced in the middle of last year.

Plunging prices have almost eliminated profit margins, and caused a rethink among manufacturers such as IBM - for whom PCs are no longer a core business - and Compaq and HP, which are planning to merge.

The Compaq-HP merger has run into trouble in the past few months, and prospects for putting together another large computer-industry merger do not look strong.

Dell, meanwhile, is only one-third of the way towards its target of a 40% global market share.

See also:

18 Jan 02 | Business
'Worst over' for tech sector
16 Nov 01 | Business
Dell profits suffer in price war
01 Nov 01 | Business
Tech firms face months of gloom
25 Oct 01 | Business
PC makers hope for XP boost
18 Oct 01 | Business
Global PC sales continue to fall
09 Sep 01 | Business
PC sales set to rise next year
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories