PC sales growth to slow

Television Digest with Consumer Electronics, March 16, 1998

IDC forecast that global PC market would grow 13.4% in 1998, to 90.6 million, down from 15.2% growth rate of 1997, when 79.9 million PCs were sold. In U.S., market is expected to grow 15.4% to 36.3 million compared with 19% rise last year, to 31.5 million PCs.

Asian economic flu bodes ill for 1998 PC sales there, IDC predicted. Outlook is for sluggish 6.9% increase compared with 16.5% in 1997, with Korea and other countries offsetting gains in China, India, Taiwan. Japanese market will improve in 2nd half, driven by sub-$1,000 PCs from U.S.-based vendors, IDC said. It forecast 7.3% increase for Japan to 8.5 million PCs from 7.9 million in 1997 - when sales declined 2.1% from 1996. Continued strength of markets in Western Europe and elsewhere, especially Latin America, will buffer weak Asian sales, IDC said. It forecast 13.8% gain in Europe on volume of 22.1 million and 18% increase to 12.5 million PC sales elsewhere.

Top-5 market share holders worldwide in 1997 all are U.S. based - and are likely to consolidate their gains further this year, IDC said. In U.S., leaders were Compaq (16%), Dell (9.3%), Packard Bell NEC (8.8%), IBM (8.7%), Gateway 2000 (7.1%). All increased shipments 25%-64% last year, except Packard Bell NEC, which saw 8% decline. Worldwide, market share leaders didn't change much: Compaq (12.7%), IBM (9%), Dell (5.9%), Hewlett-Packard (5.6%), Packard Bell NEC (5.2%). All are pushing hard in Asia, including China. Dell will build factory there but will market through retail distribution instead of direct sales, it said last month. It said its sales grew 79% in Asia-Pacific region last year despite area's economic woes.

Odyssey research group said its "Homefront" study of last 6 months indicates sub-$1,000 PCs aren't bringing more first-time customers into stores, but that repeat buyers still account for 2 of 3 PCs sold.

Study, released March 13, said first-time buyers accounted for 35% of PC sales in last 6 months, up from 32% in earlier period but down from 49% in Jan. 1995 and 1996. Household penetration continues to increase, though, Odyssey said. Installed base now is 42% of U.S. households compared with 39% for previous 6-month period and year-ago 37%. Twice-annual report surveys 2,500 consumers. Meanwhile, Computer Intelligence group reported that sub-$1,000 PCs accounted for 32.2% of U.S. market in Nov. 1997, up from 7.2% in Jan. In same period, PCs priced above $1,500 declined to 24.8% of market from 59.3%.