Low-Cost and Mobile Computer Drive PC Demand, Says IDC --- TheThirdMedia Hardware

Shipments of personal computers worldwide is continuing to improve, according to a recent study from market research agency IDC. The firm says that total worldwide PC shipments increased by 17% year-over year in the Q3 2005. The most successful companies, which experienced unprecedented growth rates in the most recent quarter, are Acer, Apple and Gateway, IDC indicated.

PC Shipments Spurred by Notebooks, Low-Cost Desktops

?We continue to see remarkable growth in the PC market and relative independence from broader economic trends. What we?re seeing now is a combination of PC replacements and new users responding to low-price milestones. Slowing economic growth should eventually constrain PC demand, but for the moment, the outlook remains quite strong,?said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker.

In the report IDC indicated that the appeal of both low-cost and portable systems continued to drive substantial growth. International markets continued to grow quickly, but even U.S. shipments grew by 11% over the prior year. The latest data show total worldwide PC shipments increasing by 17.1% year on year versus an August forecast of 13.3%.

?Notebook adoption continued to drive PC growth in the U.S. complemented by the desktop market which was stronger than expected due to aggressive pricing,?said Richard Shim, senior research analyst of Client Computing at IDC. ?The third quarter is typically defined by the back-to-school season, which was particularly strong this year. Notebooks were a significant influence in the consumers' back-to-school shopping and that carried over to other markets?

Dell's Market Share Down, HP's ?Up

While Dell continued to demonstrate strong growth results, its total growth of almost 17.8% was down from a surge of almost 24% in the second quarter, but up from a low of 14% in Q1 2005. The company benefited from particularly strong growth in EMEA, Asia/Pacific, and Latin America, although other vendors also fared well in EMEA.

HP continued to gain momentum with growth of 17.9% boosted by its leadership position in the rapidly growing EMEA region and by a solid performance in Asia/Pacific. The company also saw strong growth of portable systems and in both enterprise and consumer segments.

The result from Dell's slowdown and HP's acceleration was the shrinking gap in market share between the two companies: Dell commanded 18%, while HP's market share was 16% in Q3 2005. By contrast, Dell sold 19.6% of PCs in Q2, while HP supplied 15.6% of computers in the second quarter.

Lenovo performed well in its second quarter post-merger. Total shipments were up over 13% year on year with record volumes across form factors. Although year-on-year growth was slightly behind the market, it improved significantly from the second quarter and sequential growth was above market. The growth reflects the company's success integrating IBM and Lenovo and growing comfort with the new company among clients.

Acer continued its rapid expansion with growth over 50% in the third quarter. Although growth was down from a peak in the second quarter, the company continued to see rapid growth in EMEA and is building momentum in North America and Asia/Pacific.

Fujitsu Siemens continued to gain share in the third quarter, although growth remains focused in Europe. Shipments in EMEA were up over 28% in the third quarter, accounting for nearly 65% of total volume. Japan accounted for nearly one third of shipments, but growth was roughly flat.

Gateway delivered its second consecutive quarter of significant recovery. Following years of decline and the acquisition of eMachines in Q2 2004, the company now appears to be on the right track. Total shipments grew by over 25% in the third quarter ?down a couple points from the second quarter, but still substantially ahead of the market. The company clearly leveraged its new distribution partners and appears well positioned to capture consumer demand in the fourth quarter.

Apple cranked up its performance another notch, boosting growth in total PC shipments by 48%. The company refreshed the Mac-Mini line and its PC business continues to benefit from the rapid growth of its music business. Growth was particularly strong in its retail outlets and in Europe, although growth in the Americas and Japan was also healthy.

Solid Back-to-School Systems Boosted PC Demand Across All Regions

United States ?A strong back-to-school season provided a boost to the market and mid-tier vendors performed well following distribution channel adjustments. Hurricane Katrina, which made landfall in Louisiana on August 29, likely had some impact on the last month of the quarter, although a larger impact is expected for the fourth quarter as rising fuel prices and falling consumer confidence contribute to economic and inflationary worries.

EMEA ?Small business and consumer purchases related to European Union expansion, general infrastructure investments, and low prices continued to fuel the surge in both portable and desktop systems. A solid back-to-school market and overall strong growth set the stage for a robust fourth quarter.

Japan ?The consumer market continued to improve, pushing growth into double-digits in response to attractive new product launches. The commercial market also remained strong despite expectations of slowing growth.

Asia/Pacific ?Rising oil prices and measures to control the Chinese economy have done little to constrain PC growth. Low prices and rising adoption continued to fuel both business and consumer purchases. Demand for portable PCs, which now account for over 20% of total shipments, also remained



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