Event
Summary
Latest figures
show that Dell Computer Corporation has now passed Compaq Computer Corporation,
and taken the top spot for U.S. PC market share. This is the first time Dell
has reached this position for the overall PC market, and symbolizes the leadership
fight between Compaq and Dell. The numbers for the market, both US and worldwide,
are shown in Tables 1 and 2, below. In addition to gaining the top US spot,
Dell has increased its share of the worldwide PC market, and narrowed the gap
between itself (at #2) and Compaq (#1).
Market
Impact
This means
that, after years of trying to catch Compaq, Dell has finally succeeded. With
a year-over-year growth rate of 55+% (both US and worldwide), Dell is becoming
characterized as a "juggernaut" by some. Its growth rate was 60+% higher than
the US market growth rate and 95% higher than the worldwide rate (see Tables
below). Overshadowed by Dell's numbers is the fact that market consolidation
is continuing: worldwide market share for those not in the top five has dropped
by 2.5% overall, but in the U.S. the drop was a stunning 6%. In addition, growth
for the top three U.S. vendors far outstripped the market average, but Gateway
and H-P are barely keeping up. This hints that the U.S. market will consolidate
even faster. We expect the top three vendors (Dell, Compaq, IBM) will have over
50% of the U.S. market by late 2001 (60% probability).
| Table 1 - US PC Shipments, 1999 Q2 (Thousands of Units) [Source:IDC] |
| Q2 1999
Rank |
Vendor |
Q2 '99
Ships |
Market
Shr. (%) |
Q2 '98
Ships |
Market
Shr. (%) |
Growth
99/98 (%) |
| 1 |
Dell |
1809 |
16.6 |
1143 |
14.3 |
58 |
| 2 |
Compaq |
1798 |
16.5 |
1157 |
14.4 |
55 |
| 3 |
IBM |
876 |
8.1 |
511 |
6.4 |
71 |
| 4 |
Gateway |
845 |
7.8 |
623 |
7.8 |
36 |
| 5 |
Hewlett Packard |
841 |
7.8 |
628 |
7.8 |
34 |
| |
Others |
4710 |
43.3 |
3952 |
49.3 |
19 |
| |
All Vendors |
10879 |
100.0 |
8013 |
100.0 |
36 |
| Table 2 - Worldwide PC Shipments, 1999 Q2 (Thousands of Units)
[Source:IDC] |
| Q2 1999
Rank |
Vendor |
Q2 '99
Ships |
Market
Shr. (%) |
Q2 '98
Ships |
Market
Shr. (%) |
Growth
99/98 (%) |
| 1 |
Compaq |
3754 |
14.4 |
2819 |
13.9 |
33 |
| 2 |
Dell |
2827 |
10.9 |
1818 |
9.0 |
55 |
| 3 |
IBM |
2345 |
9.0 |
1671 |
7.8 |
40 |
| 4 |
Hewlett Packard |
1678 |
6.4 |
1239 |
6.1 |
35 |
| 5 |
NEC/PB NEC |
1283 |
4.9 |
1294 |
6.4 |
-1 |
| |
Others |
14152 |
54.3 |
11522 |
56.9 |
23 |
| |
All Vendors |
26040 |
100.0 |
20266 |
100.0 |
28 |
Although we
do not expect Dell to open up a large lead, the current trend of second-time
buyers purchasing directly from the manufacturer will help keep Dell on top.
We do not expect
Compaq to roll over and play dead - once Compaq's direct-sales business is fully
up-and-running (six-nine months - 70% probability), the battle for market leadership
will be played on more equal terrain.
User
Recommendations
Users should
care more about the market consolidation aspect of these numbers than about
who is occupying the #1 position. As consolidation continues, there will be
less value for users (especially those with large installations) in choosing
a company which is getting left behind - in the unforgiving PC marketplace,
the also-rans should be viewed as high risk.
However, we
believe this can be good news for users. On a more practical level, we believe
Compaq may choose to cut prices in order to increase volumes - greatly benefiting
larger customers. We also expect Dell to follow, as it has shown a willingness
to give super deals to large customers in order to win business.