Study: Computer DMers Gain Market Share in '98

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Dell Computer Corp. and Gateway Inc., two of the largest direct marketers of computer products, both increased their share of the global and domestic markets for personal computers in 1998, according to a preliminary year-end report from Dataquest Inc., San Jose, CA.


Dell, Round Rock, TX, which specializes in the direct sales of computers to businesses, captured 7.9 percent of the global market for personal computers in 1998, according to the report, which tracked unit shipments from PC makers. That compared with a 5.5-percent share in 1997 and ranked the company third in worldwide volume behind Compaq and IBM.


Dell also grew its share of the U.S. market to 12.7 percent in 1998 from 9.4 percent in 1997, and finished the year a close second behind Compaq, which lost some of its U.S. market share in 1998.


Gateway, Sioux City, SD, meanwhile, increased its share of the U.S. market, taking the No. 3 spot from IBM, according to the survey. Gateway, which specializes in the direct sales of PCs to homes and small businesses, captured 8.4 percent of the domestic market in 1998, up from 7.2 percent of the market in 1997. The company did not rank among the top five in global market share, however.


"I think the direct channel has taken some share in the past year," said Robert Anastasi, an analyst with Robinson-Humphrey LLC, Atlanta, although he added that Dell is probably growing faster than the direct channel as a whole. "Dell's got a huge head start on this whole direct thing, and, frankly, it's going to be hard for anyone to derail Dell."


The survey found that the total global market for PCs grew about 15.3 percent for the year to 92.93 million PC units shipped. In the United States, the total number of PC shipments in 1998 grew about 18.8 percent to 36.05 million.


"Affordability and growing relevance of Internet content is sustaining double-digit PC growth in the United States," said Bill Schaub, vice president for Dataquest's personal computing and peripherals group.


The study did not track dollar volume, which analysts and PC makers said lagged behind unit-volume growth in 1998 because of declines in the average price per unit.


Anastasi said he agreed with forecasts that the industry would continue growing at a rapid pace in 1999, although he said he did not expect prices to decline as much as they did during the past year.


Compaq led the field in both the global and domestic markets. The Houston-based PC maker had 13.8 percent of the global market in 1998, up from 13.1 percent in 1997. In the United States, Compaq garnered 16.1 percent of the market in 1998, down from 16.9 percent in 1997.


IBM, Armonk, NY, retained its global position as the No. 2 PC maker for the year, despite losing market share. The company held onto an 8.2-percent share of the global market in 1998, slipping during the past year from an 8.6-percent share in 1997.


IBM was the No. 4 PC maker in the domestic market, with an 8-percent share, down from 8.7 percent in 1997.


Hewlett-Packard, Palo Alto, CA, gained some market share both in the U.S. and worldwide markets, according to the study. The computer maker had a 7.5-percent share of the U.S. market in 1998, up from its 6.5-percent share in 1997. The company's share of the worldwide market was 5.8 percent in 1998, up from 5.3 percent in 1997.


Another study released about the same time, from International Data Corp., showed similar results.


Although Dell also showed strong growth in the fourth quarter compared with the fourth quarter of 1997, at least one analyst who saw the IDC data said he was troubled by Dell's rate of increase from the third quarter of 1998 to the fourth quarter of 1998.


"In the United States … Dell barely showed any sequential growth," Ashok Kumar, an analyst with Piper Jaffray, Minneapolis, wrote in a research report. "Europe… historically has been the fastest-growth region for the company. But for the December quarter, Dell underperformed the market, growing 33 percent sequentially."


Dell declined to comment on the surveys, saying it will release its fourth-quarter earnings next week.

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