Despite a predicted slowdown in the worldwide PC market in the next two years, analysts at IDC's recent PC Market Outlook conference in the US said purchases will continue to grow at a healthy rate.
By the end of 1996, 69.5 million units are expected to ship worldwide, an 18.5 per cent growth rate over 1995. A slight slowdown is expected in 1997 when 81 million units are expected to ship - a 16.6 per cent growth rate, said IDC's Bruce Stephen.
Compaq was the top vendor worldwide in 1996, but actually lost about 0.5 per cent market share due to weak notebook sales and transitions in company structure, Stephen said. The one vendor to watch worldwide in 1997 is Hewlett-Packard, with its strong line of desktops and servers. Dell, Toshiba and Fujitsu will be close behind, Stephen said.
Some of the factors driving the steady worldwide market growth include an acceleration of PC purchases in the Asia/Pacific region, the demand for Pentium Pro-based systems and Windows NT, the Internet and advanced multimedia capabilities such as audio and video applications, Stephen said. On the other hand, inhibitors to growth include sluggish sales in Europe, component shortages, a slowdown in the US home market and Apple's declining market share.
The US, with its strong economy, quick corporate upgrade cycle, huge demand for portables and reliance on the Internet, will see steady, but declining, growth in 1996 and 1997, said Eric Lewis, manager of personal systems research for IDC. More than 26.8 million units are expected to ship by the end of 1996, a 16.6 per cent increase over 1995. However, 30.3 million units will ship in 1997 and growth will slow to 13 per cent, largely due to a shrinking pool of first-time buyers, slowing gains in price/performance and a "wait-and-see" attitude concerning new technologies, Lewis said.
The Asia/Pacific region, including Australia, Japan, China, South Korea, India and eight other nations, is the PC market hotspot to watch out for over the next two years, said Vanessa Ho, senior analyst for IDC Asia/Pacific. "Asia is one of the most booming areas in the world," Ho said.
In all countries except Japan, South Korean Samsung, with a market share of 7.5 per cent, surged ahead of neck-and-neck competitor Compaq, which lost 1.5 per cent of its market share to fall to about 7 per cent. In Japan, Akia took the lead in sales, with Fujitsu and Toshiba, which sell desktops as well as notebooks within Japan, showing up as tough new competitors, Ho said.
Excluding Japan, 8.8 million units are expected to ship to the region by the end of 1996, an increase of 29.8 per cent over last year. By the end of 1997, that figure is expected to reach nearly 11 million units - a slightly slower, but nonetheless impressive, growth rate of 25 per cent, Ho said. Still, with problems such as poor telecommunication infrastructures, economic struggles and government restrictions on Internet usage, many of the countries in the region are far from becoming saturated with PCs, Ho said. These factors are difficult to overcome, but also leave a lot of room for growth, Ho said.
No optimism in Europe
Western Europe is suffering from a slowdown in the PC market, said Simon Pearce, senior director of personal systems for IDC Europe. A softening of the small business and home markets, continued caution due to Escom's demise and weakening of key economies will result in 16.6 million units shipping in 1996. By the end of 1997, growth will have slowed to 9.5 per cent, with a total of 18.1 million units shipping. "Many markets will continue to be depressed," Pearce said.
"However, there is a little room for optimism over the next 18 months in Western Europe," he said. For example, the notebook market was up 14 per cent in 1996 and the large business market rose 16 per cent, Pearce said. Unfortunately, the sluggish home and small business markets will continue their slump over the next year or two, he said, calling the 4th quarter increase in home sales, "too little, too late".
Compaq sold the most machines in Europe in the first half of 1996, but lost about 3 per cent of its market share. Apple, which has consistently been a strong player in Europe, dropped from 6 per cent market share to 4 per cent. "Even the French have fallen out of love with Apple," Pearce said. IBM gained the most market share, capturing nearly 10 per cent in comparison to last year's 8 per cent.
Latin America, with just 3 per cent of the total worldwide market, may be a small player, but it is one of the fastest growing regions in the world, said Eric Prothero, director of Latin American research. Continued growth and economic rebound in Mexico and Brazil, which combined represent 55 per cent of the Latin American market, will drive shipments in 1996 to 2.8 million units, a 21 per cent growth rate over 1995, Prothero said. These figures are expected to rise to 3.4 million units and 22.3 per cent respectively in 1997.
The burgeoning home market, an increased interest in the Internet, continued maturing of channels and local manufacturing of portables will all help drive purchases, Prothero said. "Unfortunately, we never really know what will happen from year to year in the local economies, many of which continue to be volatile," Prothero said.
Compaq led the pack in market share and will continue to see success in Latin America. Apple, despite its Miami-based sales and support center driving comfortable sales, lost market share, Prothero said, calling the company's position "uncertain".
The Russian vendor, Vist, ran away with market share in Eastern Europe, with over 17 per cent. However, IBM, which gained nearly 5 per cent market share "is coming back with a fury and taking Compaq's place". Compaq dropped from about 8 per cent market share to 5.5 per cent.
The smallest market of all, the region comprising the Mediterranean, the Middle East and Africa, accounts for only 2 per cent of the worldwide PC market due to political and economic uncertainty and low per capita incomes.
However, growth in the region, mainly fuelled by strong purchases in South Africa and a drop in Pentium 133MHz prices, will reach 17 per cent in 1997. A total of 1.8 million units will ship in the area by the end of 1996, driven by number-one vendor IBM which has nearly 15 per cent market share.