HP Gains Continue as Dell Struggles and Slow Commercial Demand Limits Growth in the United States, According to IDC

FRAMINGHAM, Mass.--(BUSINESS WIRE)--Worldwide PC shipments grew by 8.7% in the fourth quarter of 2006, according to IDC's Worldwide Quarterly PC Tracker. While Europe, Asia/Pacific (excluding Japan), Canada, and Latin America continued to grow at a healthy clip, shipments in the United States and Japan continued to decline. Slowing commercial sales constrained the growth of some market leaders and had a significant impact on the U.S. and Japanese markets. Despite these pockets of slow growth, the retail and consumer markets remained relatively strong – even in more mature regions.

“The U.S. market displayed an unseasonably weak performance, largely attributed to poor commercial demand, affecting vendors such as Dell and Lenovo”

Worldwide PC shipment growth of 8.7% brought quarterly shipments to 65.6 million for the quarter. This was down from 9.1% growth in the third quarter and 1.4% below a forecast of 10.1% growth for the fourth quarter. For all of 2006, PC shipments reached 228.6 million with growth of 10.0% compared to growth of 16% in 2005 and a forecast of 10.4% for 2006.

"This was a busy quarter, with the release of Vista for commercial users and the pending release for consumers on top of the ongoing transition to Portables and a generally slowing market," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "Add to that the changing pricing environment and segment dynamics and it was a very challenging quarter. HP clearly was able to capitalize on the situation, solidifying its lead in worldwide quarterly shipments with a 3.4% share advantage over Dell, but it also reflects underlying pricing and segment trends that were tough on competitors such as Dell, Lenovo, Gateway, and Fujitsu-Siemens."

As Dell updates its strategy, it saw fourth quarter shipments fall year on year and sequentially in the United States and worldwide. Nevertheless, the company maintained its number one position in worldwide shipments for all of 2006, though by a narrow margin. Meanwhile, companies such as HP, Acer, Toshiba, and Apple benefited from a combination of strong retail and consumer sales, portable PC adoption (notably in the consumer segment), and aggressive pricing. From this perspective, it does not appear that the January release of Vista's consumer version had a big impact on fourth quarter shipments, but it remains to be seen if the consumer drivers will remain strong in the first half of 2007.

"The U.S. market displayed an unseasonably weak performance, largely attributed to poor commercial demand, affecting vendors such as Dell and Lenovo," said David Daoud, manager of Personal Computing and PC Tracker Programs at IDC "However, the consumer notebook market was solid, essentially benefiting vendors active in the retail sector. The channels were also relatively healthy, taking advantage of low component prices and healthy demand in the SMB segment."

Regional Outlook

The United States slogged through another slow quarter as consumer demand remained weak and commercial demand slowed considerably. HP had a huge quarter, leveraging strong retail and commercial business to grow shipments nearly 16% while the rest of the field struggled. Where a year ago Dell had nearly a 13% share lead, HP trimmed that to just 3.9% in the fourth quarter. While Lenovo continues to struggle with declining volume, and Gateway shipments were essentially flat once again, Dell revealed its vulnerability, with shipments falling precipitously under HP's continued pressure.
EMEA continued to grow at a healthy clip with strong gains in CEMA, continued portable adoption, and healthy consumer growth. Slowing commercial demand had a negative impact on growth for Dell, Fujitsu-Siemens, and Lenovo. Nevertheless, HP and Acer leveraged their strength in the consumer and SMB markets to capture share.
Japan saw shipments recede by more than 10% year on year as the pending release of Vista and competition from flat panel LCD TVs cut into consumer demand. Commercial demand fared better, maintaining shipment volume.
Asia/Pacific (excluding Japan) maintained steady growth as expected, although Taiwan came in short of forecasts in part due to a delayed government tender. The outlook for the region is generally unchanged at this point with China and India continuing to be key drivers, although political tensions in countries like Thailand remain a wild card.

Vendor Highlights

HP built on its third quarter momentum, boosting year-on-year growth to nearly 24% (the fastest for HP since 2000) and taking a clear lead in worldwide shipment volume for the quarter. Growth in the United States rebounded to near 16% from a dip to single digits in the third quarter, while international growth surged above 28% with a strong showing in EMEA.
Dell was unable to recover from a slow third quarter and stumbled through the end of the year. Shipments to the U.S. market, which continue to represent over 50% of Dell volume, were down nearly 17% year on year following a single-digit decline in Q3. In addition, international growth, which was reasonably stable in the third quarter, fell to just 1.5% in 4Q06 with notably slower growth in all regions. Dell's focus on profitability over share is coming right at a time of aggressive competition from companies such as HP, Acer, and Apple, and is compounded by a slow commercial market. As a result, Dell is in the unusual circumstance of seeing volume decline sequentially from the third quarter in both the United States and worldwide.
Lenovo continues to benefit from its leadership position in Asia/Pacific, while struggling for traction in other regions. The company continues to gain share in APeJ, which accounts for nearly 60% of volume, while shipments declined in the United States and Japan, and modest volume gains in other regions were not enough to preserve share.
Acer had another solid quarter with strong gains in all regions. EMEA represents roughly 70% of Acer's worldwide shipments, and grew by nearly 37% in the fourth quarter, but expansion in the United States and Asia/Pacific (excluding Japan) also contributed to the company's gains.
Toshiba's focus on portable PCs continues to give the company an edge in overall growth. Worldwide shipments were up more than 17% in the fourth quarter, with an increase of more than 14% in the United States. Although growth was slower than last quarter, and closer to market rates for portable PC shipments, Toshiba continues to gain share in total shipments and benefits from the higher margins for portable PCs.
Gateway had another slow quarter interrupt a run of growth in 2005 and the first half of 2006. Slower growth in the small and medium business segments in the United States as well as more competition in the consumer segment constrained growth, though performance was still ahead of the overall U.S. market.
Apple saw another quarter of very solid growth as the company combined new portable products with strong retail sales and positive press following a successful transition to Intel processors. Worldwide and U.S. shipments were each up roughly 30% year on year. The company also continues to benefit from its music business and new developments such as the iPhone will not only drive more positive press and buyer interest, but further expand the number of people using at least one Apple product who may come into the Apple fold.

Top 5 Vendors, Worldwide PC Shipments, Fourth Quarter 2006 (Preliminary) (Units Shipments are in thousands)
Rank	Vendor	Q4 2006 Shipments	Market Share	Q4 2005 Shipments	Market Share	4Q06/4Q05 Growth

1	HP	11,900	18.1%	9,613	15.9%	23.8%
2	Dell	9,666	14.7%	10,552	17.5%	-8.4%
3	Lenovo	4,772	7.3%	4,398	7.3%	8.5%
4	Acer	4,630	7.1%	3,360	5.6%	37.8%
5	Toshiba	2,439	3.7%	2,081	3.5%	17.2%

	Others	32,180	49.1%	30,313	50.3%	6.2%

	All Vendors	65,587	100.0%	60,318	100.0%	8.7%
Notes: Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold. PCs include Desktop, Notebook, Ultra Portable, and x86 Servers. PCs do not include handhelds. Data for all vendors are reported for calendar periods. Source: IDC, January 17, 2006

Top 5 Vendors, Worldwide PC Shipments, Full Year 2006 (Preliminary) (Units Shipments are in thousands)
Rank	Vendor	2006 Shipments	Market Share	2005 Shipments	Market Share	2006/2005 Growth

1	Dell	39,098	17.1%	37,755	18.2%	3.6%
2	HP	38,842	17.0%	32,575	15.7%	19.2%
3	Lenovo	16,619	7.3%	12,979	6.2%	28.0%
4	Acer	13,581	5.9%	9,845	4.7%	37.9%
5	Toshiba	9,177	4.0%	7,234	3.5%	26.9%

	Others	111,267	48.7%	107,450	51.7%	3.6%

	All Vendors	228,583	100.0%	207,837	100.0%	10.0%
Notes: Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold. PCs include Desktop, Notebook, Ultra Portable, and x86 Servers. PCs do not include handhelds. Data for all vendors are reported for calendar periods. Source: IDC, January 17, 2006

Top 5 Vendors, U.S. PC Shipments, Fourth Quarter 2006 (Preliminary) (Units Shipments are in thousands)
Rank	Vendor	Q4 2006 Shipments	Market Share	Q4 2005 Shipments	Market Share	4Q06/4Q05 Growth

1	Dell	4,783	27.9%	5,741	33.3%	-16.7%
2	HP	4,115	24.0%	3,549	20.6%	15.9%
3	Gateway	1,138	6.6%	1,145	6.6%	-0.7%
4	Apple	808	4.7%	614	3.6%	31.8%
5	Toshiba	804	4.7%	703	4.1%	14.4%

	Others	5,502	32.1%	5,487	31.8%	0.3%

	All Vendors	17,150	100.0%	17,240	100.0%	-0.5%
Notes: (a) IDC estimates for Gateway & Toshiba are prior to financial earnings reports. Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold. PCs include Desktop, Notebook, Ultra Portable, and x86 Servers. PCs do not include handhelds. Data for all vendors are reported for calendar periods. Source: IDC, January 17, 2006

Top 5 Vendors, U.S. PC Shipments, Full Year 2006 (Preliminary) (Units Shipments are in thousands)
Rank	Vendor	2006 Shipments	Market Share	2005 Shipments	Market Share	2006/2005 Growth

1	Dell	20,472	31.2%	21,466	33.6%	-4.6%
2	HP	14,104	21.5%	12,456	19.5%	13.2%
3	Gateway	4,411	6.7%	3,886	6.1%	13.5%
4	Apple	3,109	4.7%	2,555	4.0%	21.7%
5	Toshiba	2,846	4.3%	2,327	3.6%	22.3%

	Others	20,589	31.4%	21,184	33.2%	-2.8%

	All Vendors	65,531	100.0%	63,874	100.0%	2.6%
Notes: (a) IDC estimates for Gateway & Toshiba are prior to financial earnings reports. Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold. PCs include Desktop, Notebook, Ultra Portable, and x86 Servers. PCs do not include handhelds. Data for all vendors are reported for calendar periods. Source: IDC, January 17, 2006

IDC's Worldwide Quarterly PC Tracker gathers PC market data in 55 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

For more information, or to subscribe to IDC's Worldwide Quarterly PC Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com. You may also contact IDC's sales hotline at 508-988-7988 or email sales@idc.com.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a division of IDG, the world’s leading technology media, research, and events company. Additional information can be found at www.idc.com

All product and company names may be trademarks or registered trademarks of their respective holders.