UK, Spanish PC markets showing healthy growth, Germany more sickly, say analysts.

EUROPEMEDIA-(C)2003 Van Dusseldorp & Partners - http://www.vandusseldorp.com/

The UK and Spanish PC markets are showing significant growth, while the German PC market, like the rest of the country's economy, is in the doldrums, according to new research from market analysts IDC.

The UK PC market has shown promising growth in the first quarter of 2003: at five per cent year-on-year, the increase in PC shipments has been assisted by a noticeable rebound in commercial expenditure and provides a positive signal in terms of the loosening of corporate IT budgets. The notebook market has also continued to assist in PC shipment growth, with intensified vendor competition and attractive price-points appealing to both consumer and commercial users. In total, notebook shipments have grown by 14.7 per cent year-on-year.

Although many businesses are not yet indulging in full-scale renewals, PC roll-outs are taking place step-by-step, say the researchers. As such, commercial desktop shipments have grown by just over ten per cent and commercial notebooks by just over 12 per cent year-on-year.

Shipments to the consumer market have, however, been disappointing. A 12.7 per cent decline in consumer desktop PC shipments offset the positive gains of the commercial market and resulted in only one per cent growth in the desktop market overall. Consumer spending remained strong, UK consumers racked up record levels of debt on their credit cards towards the end of the first quarter of this year, and, contrary to expectations, were seemingly undeterred by the war with Iraq. However, desktop purchases or renewals did not feature at the top of consumers' shopping lists. Although many vendors competed fiercely on the price front, the attractiveness of the notebook proved to be a far greater temptation for consumers in the first quarter of 2003.

Consumer notebook sales continued to boom, recording another strong quarter with 22.8 per cent year-on-year growth. The notebook market looks set to remain the key driver of consumer growth into the near future and beyond. Increased value offerings and ongoing price declines will continue to boost their attractiveness. The Intel server market also experienced healthy growth of 15.1 per cent year-on-year, further testament to a gradual pick-up in business confidence.

Meanwhile, the Spanish PC market recorded another impressive performance in the first quarter of 2003. With shipments growing at over 29 per cent year-on-year - making it the third consecutive quarter with double-digit growth - a rebound clearly seems to be underway. Most vendors reported gains in all form factors and sectors, which reinforces the recovery of the PC industry after a year of very low activity. Desktop shipments grew by 19.7 per cent and notebook sales rose 56.7 per cent. Intel server shipments reached their highest levels since the post-2000 downturn. However, the market remains primarily driven by sustained investments from small and medium businesses, as well as by the buoyant consumer notebook market, while corporate investments are still slow.

The long awaited renewal cycles in the corporate market are expected to start taking place this year, albeit gradually, due to the continued existence of budget constraints as well as cautiousness in future investments. A healthy public sector, on the contrary, partially offset weak corporate demand.

The small and medium business market has been the key driver this quarter. Despite fears that the uncertain economic situation could affect their finances, small and medium businesses are re-assessing their efficiency and market competitiveness, and are making a priority of IT investment. After more than a year of gloomy forecasts, the small and medium business market has started to get used to an economic slowdown that does not appear to be reaching an end, and seem to have decided to push forward, investing in the necessary infrastructure as well as in upgrading their existing equipment.

The consumer market remained buoyant, performing even stronger than expected, despite indicators of lower confidence in March. Consumer desktop sales displayed positive trends but it is clearly on the notebook side that the market continues to record outstanding growth. Notebook sales indeed continue to boom, stimulated by increasingly attractive product offerings and lower price points. Vendor competition remained fierce in both segments. Interestingly, however, though local players seem to have conquered the consumer desktop marketplace, occupying the top four positions and over 80 per cent of the market, A-vendors are regaining share in the notebook space, all recording strong double-digit growth, although Airis Computers maintained leadership.

The trends observed over the past nine months will continue to drive growth in the second quarter, say the researchers. The public sector is expected to remain healthy, partly offsetting continued weakness in corporate accounts, and SMB sales will hold well thanks to improved vendor and channel strategies, better product positioning, and more attractive offerings. Consumer sales are also expected to remain strong in the second quarter, before slowing down during the traditional summer season.

Over in Germany, however, PC sales did not manage to start the year with positive growth, according to IDC. The largest European market reported an overall decline of 1.6 per cent in the first quarter of 2003, compared with the same quarter last year, shipping approximately 1.8m PCs. The economic situation in Germany has not yet recovered and its stagnation extends into its third year. PC results could have declined even further had it not been for the stronger performance of the notebook and Intel server markets.

The desktop market continues to be the most penalized and shows no real signs of recovery, reporting an annual decline of nine per cent, say the researchers. Although the prospects of a major economic rebound in 2003 are limited, and while IT budgets remain constrained, corporate renewal cycles are expected to gradually pick up towards the second half of 2003 and into 2004. But the desktop market will not regain the momentum enjoyed prior to 2000.

Contrasting with declining desktop sales, the notebook market continued to outperform the overall market, reporting growth of 22 per cent, with volumes reaching nearly half a million. Notebook sales continue to be stimulated by fierce competition between international, regional, and local vendors battling to offer products at a very competitive price point, making the machines very attractive to the end-user.

The Intel server market continued to display healthy patterns, increasing by 12 per cent year-on-year, thanks to sustained SMB demand driving business sales. Fujitsu-Siemens, Dell, Maxdata, and Transtec all reported double-digit growth year on year.((Distributed via M2 Communications Ltd - http://www.m2.com))