Driven by price cuts, worldwide PC shipments totaled 54.9 million units in the second quarter of 2006, an 11 percent increase from the same period last year, according to preliminary results by Gartner, Inc.

Central processing unit (CPU) inventory clearance activity by Intel, and generally more aggressive pricing by Intel and AMD attributed to lower prices in the quarter. The impact of the CPU price decline varied among regions. In the United States and Asia/Pacific, the cuts boosted shipments, while in Europe, Middle East and Africa (EMEA) where there remains higher than normal finished goods inventory, shipments were adversely impacted.

“On a worldwide basis, large vendors continued to gain share at the expense of mid-tier vendors and system builders,” said Charles Smulders, vice president of Gartner’s Client Computing Group, in the press release. “The price cuts during the quarter undoubtedly helped the large vendors, as they were able to put more pricing pressure on the smaller players. Intel’s accelerated ramp on its new CPU lines will expose those vendors who have not invested enough in tools and processes to manage their supply chain.”

In the second quarter of 2006, the top 5 vendors accounted for nearly 50 percent of the worldwide PC market (see Table 1). These vendors all grew faster than the overall industry average. Dell maintained its No. 1 position in worldwide PC shipments, as it continued to grow much faster outside the United States. Hewlett-Packard continued to show strength in the worldwide market, backed by solid consumer growth, mainly in mature markets.

Table 1
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2Q06
(Thousands of Units)
----------------------------------------------------------------------
                  2Q06   2Q06 Market    2Q05   2Q05 Market  2Q06-2Q05
Company        Shipments   Share (%) Shipments   Share (%)  Growth (%)
----------------------------------------------------------------------
Dell               9,730        17.7     8,717        17.6       11.6
Hewlett-Packard    8,107        14.8     7,126        14.4       13.8
Lenovo             3,994         7.3     3,518         7.1       13.5
Acer               2,836         5.2     2,105         4.3       34.7
Toshiba            1,906         3.5     1,496         3.0       27.4
Others            28,338        51.6    26,520        53.6        6.9
Total             54,911      100.00    49,482       100.0       11.0
----------------------------------------------------------------------
Note: Data includes deskbased PCs, mobile PCs and X86 servers.
Source: Gartner Dataquest (July 2006)

The EMEA region experienced single-digit growth for the first time in three years, as PC shipments in the region totaled 16.7 million units, a 7 percent increase from the same period last year. The slower growth rate was exaggerated by vendors and the channel trying to reduce high PC inventory positions, as well as working to ensure the Restriction of Hazardous Substances (RoHS) recycling directive compliance.

The PC market in the United States grew 6.4 percent, as shipments reached 16.6 million units in the second quarter (see Table 2). Dell grew at the industry average in the United States, and this performance was much better than the first quarter. Dell’s focus on service and support, and adoption of a more aggressive pricing strategy were key factors in its better performance. HP had much faster growth than the U.S. industry average due to strong consumer shipments.

“The consumer market continued to lead the U.S. PC market, as mobile PC shipments remained strong. Accelerated price declines associated with the CPU oversupply stimulated additional mobile demand,” said Mikako Kitagawa, principal analyst for Gartner Dataquest’s Client Computing Markets Group. “The professional market experienced slow growth mainly due to the sluggish sales in the large enterprise market, however the small business market continued to grow steadily.”

Table 2
Preliminary U.S. PC Vendor Unit Shipment Estimates for 2Q06
(Thousands of Units)
----------------------------------------------------------------------
                  2Q06   2Q06 Market    2Q05   2Q05 Market  2Q06-2Q05
Company        Shipments   Share (%) Shipments   Share (%)  Growth (%)
----------------------------------------------------------------------
Dell               5,302       32.0      4,988        32.0        6.3
Hewlett-Packard    3,127       18.9      2,713        17.4       15.2
Gateway            1,035        6.2        890         5.7       16.3
Apple Computer       766        4.6        663         4.3       15.4
Lenovo               639        3.9        607         3.9        5.3
Others             5,717       34.5      5,724        36.7       -0.1
Total             16,587     100.00     15,585       100.0        6.4
----------------------------------------------------------------------
Note: Data includes deskbased PCs, mobile PCs and X86 servers.
Source: Gartner Dataquest (July 2006)

Asia/Pacific and Latin America continued to be the regions with the strongest growth rates. The Asia/Pacific PC market grew 22.5 percent, as shipments reached 12.4 million units in the second quarter. The region was driven by mobile PC shipments which increased 48 percent in the quarter compared to the same period last year.

Latin America PC shipments increased 27 percent in the second quarter with shipments totaling 4.2 million units. Local-branded vendors experienced accelerated growth due to their strong retail presence and their participation in low cost PC programs.

In Japan, PC market growth was nearly flat as shipments reached 3.5 million units in the second quarter, a 0.5 percent increase from the same period last year. Negative consumer growth was offset by stronger sales in the professional market.

These results are preliminary. Additional research can be found on Gartner’s Computing Hardware section on Gartner’s Web site at http://www.gartner.com/it/products/research/asset_129157_2395.jsp

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