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RealTime IT News

PC Sales Recovery Spreads

By Ron Miller

Worldwide PC sales remained brisk in the first quarter this year with Dell leading the way with a quarterly sales record of 7.68 million units shipped.

According to IT researcher IDC, Dell led its closest competitor, HP, in worldwide sales by more than three percentage points.

Dell total market share increased from 16.9 percent in the first quarter of 2003 to 18.6 percent in the first quarter of this year. HP, on the other hand, remained fairly flat with the market share decreasing slightly from 15.7 percent to 15.6 percent from last year to this.

In the U.S. market, the gap was much more dramatic, with Dell controlling an impressive 33.5 percent market share last quarter. HP, the closest competitor, tallied 18.6 percent (down from 19.5 percent in the first quarter of 2003).

IDC analyst, Alan Promisel, who helped prepare the report, said the growth can be attributed to a stronger economy and a pent up demand, especially in the United States.

"Companies have been sitting on legacy PCs since they were replaced ahead of Y2K, but the funding just wasn't there," Promisel said. "IT managers have realized a need for replacements for some time, and staff was losing productivity using outdated PCs, but they were looking for the economy to improve and for budgets to replenish outdated PCs."

IDC analyst Roger Kay believes that continued growth in the PC sales are a signal that economy has finally rebounded. "This quarter's results ratify the economic recovery," Kay said. "We have nearly a year of double-digit growth in the PC industry, which is a concurrent indicator of economic activity."

Promisel points out that the growth is more than a temporary spike to satisfy the pent up demand. "This is not a snap back where you see a huge spike and then see more nominal sales. This will be a more sustained recovery as you see companies moving to deploy new PCs throughout their installed base," Promisel said.

Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker report, believes the growth increase can be attributed to a number of factors including an aging installed base, rapid portable adoption and aggressive pricing.

So far Dell has done well, according to IDC analysts, because the demand has been in small to medium sized businesses, but Promisel said the next wave of PC replacement will be in the large enterprise setting where IBM and HP may be better situated to make a move.

"Dell is really the big winner here for this quarter, but they will be competing moving forward where the bulk of new market share is the large enterprise space, where there is demand for servers, networking and storage space, and they will be competing with HP and IBM for those dollars," Promisel said.

Bruce Eric Anderson, a Dell spokesperson, said the company believes that will make little difference, since they are competing in that space already.

"We'll continue executing the strategy we've laid out. The performance of the company in all segments has been consistent and we're comfortable with the ability to continue that trend," Anderson said.