Dell Takes No. 2 Spot From IBM

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Direct marketer Dell Computer Corp., Round Rock, TX, continued making rapid gains in its share of the personal computer market during the first quarter, taking the No. 2 spot from rival IBM, Armonk, NY, in terms of the number of PCs shipped globally, according to figures released last week by two research firms.


According to Gartner Group's Dataquest division, Dell shipped almost 2.3 million units during the quarter, up from 1.54 million in the year-ago period. Its share of the global market increased to 9.2 percent, vs. 7.2 percent in the first quarter of 1998. No. 3 IBM, which shipped about 2.1 million units in the recent quarter and 1.61 million in the year-ago period, also saw its share of the global PC market grow, but not as much as Dell's. IBM garnered 8.4 percent of the global market during the first quarter of 1999, vs. 7.5 percent in the year-ago first quarter.


International Data Corp., Framingham, MA, which uses a different methodology than Dataquest, reported similar findings. IDC calculated that Dell grabbed the No. 2 spot in global distribution with a 10-percent market share, shipping 2.45 million PCs.


Bruce Stephen, vice president of PC research for IDC, said Dell benefited from its business-client base in the first calendar quarter.


"They aren't as consumer-heavy as some of the other companies that are out there, so they didn't have that first-quarter drop-off that the more consumer-oriented companies have," he said.


Dell's initiatives to reach small and medium businesses in particular contributed to the strong gains for the period, he said, and the company's global market share also was boosted by gains in Western Europe and Asia. The United Kingdom, France and Germany all showed strong demand during the quarter, according to IDC, while weakness in Russia was offset by gains in the Middle East and Canada. Japanese consumers also helped boost PC demand in that country during the first quarter, according to IDC.


Compaq Computer Corp., which retained its position as the No. 1 PC maker both domestically and globally, lost market share in the quarter, according to both IDC and Dataquest, after analysts said it was slower than its rivals to lower its prices. Dataquest, which does not include shipments of servers in its data, reported that Compaq shipped 3.35 million units in the recent quarter, for 13.4 percent of the market, vs. 3.05 million, or 14.3 percent of the market, in the first quarter of 1998.


According to the Dataquest figures, Gateway Inc., North Sioux City, SD, also grew its market share during the first quarter, moving into the No. 5 spot in world-wide shipments with nearly 1.08 million units shipped and a 4.3-percent share of the market, vs. 779,000 units and a 3.7-percent share in the year-ago first quarter.


In the United States, Gateway ranked third in PC shipments, according to IDC's data, with 918,000 units and a 9.3-percent share. Compaq was No.1 in the U.S., with 1.59 million units shipped and a 16.1-percent share, followed by Dell, with 1.46 million units and a 14.8-percent share.


"Gateway just seems to be executing extremely well in the consumer segment," said Stephen. Like Dell, Gateway also benefited from improvements in its international operations, Stephen said.


"We've continued to see over the course of the last couple of years that the direct sales channel is gaining market share," he added, although he said that selling computers directly is not a magic bullet. Micron Electronics, for example, is the third-largest direct marketer of computers but has not experienced the same degree of growth enjoyed by Gateway and Dell.


Hewlett-Packard, Palo Alto, CA, raked fourth both in the United States and globally in both surveys. Dataquest reported that HP had a 6 percent share of the global market in the recent quarter, with about 1.49 million units shipped, compared with a 6.2-percent share and 1.32 million units shipped in the year-ago first quarter.


HP also was the only indirect PC vendor to report sequential growth in the first quarter, according to IDC.
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