The PC industry is running hard, but staying in the same spot.
Shipments of desktops, notebooks and servers with processors from Intel and Advanced Micro Devices grew by about 10 percent worldwide in 2006, according to figures released Wednesday from research firm Gartner. During the calendar year, 239.4 million PCs left factories.
Hewlett-Packard, the largest PC maker in the world for two straight quarters, expanded its lead over rival Dell in the fourth quarter worldwide. HP also edged closer to Dell in U.S. shipments. IDC found similar results, which were also released Wednesday.
For the year, revenue generated from worldwide PC sales across the industry, however, remained flat at US$201.1 billion, according to the firm's early estimate. It doesn't appear that 2007 will bring much change. PC shipments will go up by 9.9 percent, Gartner predicts, but revenue will only climb to US$201.3 billion.
"It is going to be a tough year," said Charles Smulders, an analyst for Gartner.
The main culprit is price cutting. PC makers have continually tried to one-up each other with low prices to gain market share, which has depressed prices. Sony saw its market share jump in the U.S., Smulders noted, but after cutting prices--a move the company resisted for some time.
The customer base is also changing. In the United States, PC shipments increased by only 1.2 percent for the year and actually decreased by 3.2 percent during the fourth quarter. Instead, growth in unit shipments is coming from emerging markets, where customers can't spend as much.
"There will be some pickup around Vista," Smulders said referring to the latest version of Microsoft Windows. "Toward the end of the year, we may see the start of a replacement market, but that is more of a 2008 issue."
The news, however, isn't bad for everyone. Some companies have learned to adapt better to the low-margin environment, and some have grown substantially faster than the market as a whole. No. 1 HP now has had six straight profitable quarters in PCs, Smulders said.
In the fourth quarter, HP saw its worldwide market share rise to 17.4 percent, a 23.9 percent increase over the same period a year ago. Dell, meanwhile, saw its market share decline. In the fourth quarter, the company accounted for only 13.9 percent of PCs shipped worldwide, an 8.7 percent drop from the same period a year ago. That's the lowest market share for Dell in four years. (Dell actually shipped more PCs than HP on a worldwide basis for the year, but trailed HP in the third and fourth quarters.)
In the fourth quarter, Dell remained No. 1 in the United States, but it saw its market share drop by 17.9 percent. Dell now has 29.1 percent of the U.S. market, down from 34 percent for the same period a year ago. HP saw its market share increase in the U.S. to 25.3 percent, a 16 percent jump.
"There is a big question mark around Dell," said Loren Loverde, an analyst at IDC. Dell earlier in 2006 said it would seek profitability and sell to higher-end customers, and worry less about market share, he said. Additionally, Dell historically sees its PC shipment growth slow a bit in the fourth quarter, in comparison with rivals, because it places less emphasis on the consumer market. The consumer market accounts for only 15 percent of Dell's revenue. Still, the decline in market share is more rapid than anticipated, Loverde said.
"I expected them to be much more sensitive to market share," he said.
Acer, No. 4 worldwide, also remained the fastest growing PC maker for the third year in a row. For the year, Acer's shipments grew by 37.1 percent. Acer's market share in the fourth quarter stood at 6.8 percent.
"Acer has a business model that is suited to a low margin, low ASP (average selling price) market," he said.
Toshiba, which concentrates on the healthier notebook segment, also did well in 2006. For the year on a worldwide basis, Toshiba saw shipments grow 27.3 percent. In the fourth quarter, the company had a 3.8 percent market share. Toshiba is the fifth largest PC maker worldwide, according to both Gartner and IDC, and is about tied with Apple for the fourth spot in the U.S. (Gartner puts Toshiba at No. 4 in the United States, while IDC says Toshiba comes in at No. 5, closely following Apple.)
Apple also saw its fortunes rise. The company accounted for 4.7 percent of the U.S. market in the fourth quarter, growing shipments by 31.8 percent, according to IDC. Apple is the fourth largest PC maker in the United States, ranked behind Dell, HP and Gateway and barely ahead of Toshiba, according to IDC. Worldwide, Apple is ranked seventh and had a 2.4 percent market share in the fourth quarter, Loverde said. That's up from 2.1 percent worldwide in the fourth quarter 2005.
By contrast, Lenovo, continued to have trouble growing outside China. For 2006 as a whole, Lenovo saw its market share barely rise, from 6.9 percent to 7 percent worldwide for the year.
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