IDC: Worldwide PC market down for first time ever

Global PC shipments declined by 2 per cent in the second quarter of this year from the same period last year, logging the first year-over-year quarterly decline ever, market research company International Data Corp. (IDC) reported Thursday.

The worldwide shipments were 7.2 per cent lower than in the first quarter of the year, IDC reported.

A weak economy in the US, soft consumer demand in Europe, flat shipments in Japan and slowing growth in key Asian markets combined to cause worldwide sales dip to a quarterly total of 29.8 million units, IDC said in a statement announcing its report.

Dell Computer was the only major vendor to increase its sales in the second quarter, with Compaq Computer , IBM , Hewlett-Packard and Fujitsu Siemens marking declines from last year's second quarter.

As the US economy slowed from a more than decade-long expansion, PC shipments there declined 8.1 per cent from a year earlier and 1.3 per cent from the first quarter -- results that fell just below forecasts, the statement said. Meanwhile, shipments in Japan were flat in the second quarter following a strong 2000 when they rose 30 per cent. Corporate capital expenditure and consumer spending were both weak there.

Even growing markets weakened. In China and India, consumer spending softened and government purchases declined. South Korea, which had been boosted by a government program to encourage families to start using the Internet, also showed slowing growth, as did Australia. Sales growth also slowed in Europe, where growing commercial purchases only partly offset weak consumer demand, IDC said.

Even the Asia-Pacific (excluding Japan) market, which has been a relatively bright spot for the industry, showed disappointing growth in the second quarter. A report specifically on Asia-Pacific, due next week, is expected to show year-over-year growth of about 9 per cent, said Kitty Fok, associate director for PC research at IDC Asia-Pacific, in Hong Kong.

"The PC market is still strong in Asia-Pacific because a lot of people are still looking for a first PC," Fok said in an interview Friday. However, "it's actually slower than what we originally expected, particularly in China and Korea," she added.

In China, the largest national market in the region, many enterprises are playing a waiting game before making large investments in PCs -- waiting to see the effect of China's expected admission to the World Trade Organization, or for the release of Windows XP, or for the prices of Intel Pentium 4-based PCs to go down, Fok said. In addition, government agencies made few purchases in the second quarter, she added.

In South Korea, a government-led effort to get families to buy PCs for Internet use has run out of steam, and the economy remains weak.

Under the incentive program for PC purchases, "you saw major growth in early 2000, but we continued to see the market slow down after that," Fok said. Most consumers who were attracted by the program have already bought a PC, she explained.

The advent of non-PC Internet access devices -- including handheld devices, set-top boxes and Internet-connected home appliances -- may also be affecting the Asia-Pacific PC market, Fok said. Although that market is still small, by 2005 IDC expects it to surpass the PC market in size.

Still, the main reason for the worldwide slowdown was the weakness of the US economy, she said.

Among vendors, worldwide sales declines from a year earlier ranged from 1.1 per cent for Fujitsu Siemens to 10.5 per cent for Compaq. Dell increased its market share in the quarter to 13.4 per cent from 11.4 per cent, strengthening its position at the top spot with more than 3.9 million units shipped. Compaq remained in second place with about 3.6 million units shipped, and IBM held on to third place with about 2.1 million shipments, a 5.6 per cent decline year-over-year.

HP, in fourth place, shipped just under 2.1 million PCs in the quarter, a drop of 8.6 per cent. Fujitsu-Siemens shipments totaled just under 1.4 million worldwide. All other vendors combined shipped about 16.6 million units, down 2.1 per cent from the year-earlier quarter.

IDC is a division of International Data Group Inc., the parent company of IDG News Service.

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