PC Market 'Healthy' Despite Weak Demand in Europe

Personal computer shipments grew roughly 10 percent in the second quarter despite soft sales in Europe, two influential research firms reported Wednesday. Analysts found rivals continuing to gain on leading PC maker Dell Inc. and predicted that low prices would continue for the rest of 2006.

Researchers at IDC said worldwide PC shipments grew 9.7 percent. Analysts at Gartner Inc., who use slightly different measurement methods, pegged the increase at 11.0 percent.

Worldwide, Dell just managed to outgrow the broader market, with about an 11 percent jump in shipments. But other players grew faster. As a result, Dell's market share barely changed: IDC said it was 19 percent in the second quarter, Gartner 18 percent.

Hewlett-Packard Co. gained less than a percentage point of market share in both analyses, holding the worldwide No. 2 slot at roughly 15 percent. China's Lenovo Group Ltd. was third with about 7 percent and Taiwan-based Acer Inc. was No. 4 at roughly 5 percent. Acer's shipments rose about 35 percent in the quarter, best among the industry's leaders.

In the U.S., which accounts for more than half of Dell's business, the Round Rock, Texas-based company's market share remained essentially flat at 34 percent according to IDC and 32 percent according to Gartner. HP achieved more than twice Dell's growth in the U.S., claiming 20 percent share in IDC's tally and 19 percent in Gartner's count.

Both firms noted that Europe was a slow spot in the second quarter. IDC blamed it partly on shoppers being distracted by World Cup soccer, saying the 7 percent growth seen in European PC shipments was well below forecasts of 12 percent.

Looking ahead, diverging trends are expected to buffet PC sellers. Intense competition among microprocessor vendors Intel Corp. and Advanced Micro Devices Inc. should help keep PC prices down, prompting consumers to buy. Back-to-school purchases could also provide a sales boost in the current third quarter.

But the 2007 rollout of Microsoft Corp.'s new operating system, Vista, figures to put many purchases on hold, especially with video game consoles, flat-panel TVs and other hot gadgets vying for consumer attention around holiday season.

"There's going to be a competitive pricing environment for the rest of the year," said Charles Smulders, a Gartner vice president. "That's good news for end users."

Loren Loverde, director of IDC's worldwide quarterly PC tracker, said the industry appears to be settling into a period of 10 percent annual growth rates, which remains healthy although lower than the rates closer to 15 percent seen in the past few years.

"The net-net is that shipments will be softer than what we previously projected in the second half of the year," he said.


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