Dell rules PC market

The PC industry racked up another quarter of double-digit growth to close out 2004, thanks to Europeans and corporate buyers.

Shipments of personal computers grew by 13.7 per cent worldwide in the fourth quarter, according to figures from market researcher IDC, while rival Gartner said units increased by 10.9 per cent globally in the last quarter of last year.

For the year, PC shipments came to 177.5 million, a record, and grew by 14.7 per cent over the 2003 total, according to IDC. Gartner, meanwhile, said 189 million PCs left factories last year, a growth rate of 11.8 per cent. (Both researchers count the number of desktops, notebooks and non-RISC servers shipped, but their methodologies in counting differ slightly.) The end results were close to what both researchers initially predicted for the year.

The increase was largely fuelled by a constituency that has been absent for a few years: corporate buyers. Companies that bought new PCs in the face of the Y2K problem finally upgraded. European businesses and consumers, benefiting from a strong euro, also bought PCs in growing numbers.

Gartner's Charles Smulders said: "The Y2K upgrade should have begun in 2003, but it was delayed." Y2K replacement buying should continue through the first half of 2005 but then peter off.

As a result, "2005 will be slower than 2004. The replacement cycle will slow down in the second half," Smulders said.

Despite rampant price cuts, revenue for the industry, overall, is likely to have increased as well, as a larger portion of PCs shipped were laptops, which generally sell for more. In 2003, shipments increased to 11 per cent, but revenue remained essentially flat at $175bn, according to IDC.

Winners in the most recent quarter include Dell, which expanded its lead both globally and in the United States, and Acer, which broke into the top five worldwide in 2004 and saw shipments grow by about 34 per cent -- faster than other major vendors.

Dell saw shipments grow by 21.1 per cent worldwide in the fourth quarter to give the company a 17 per cent share of the global market, according to IDC. For the year, Dell saw shipments grow by 23 per cent to give it a market share of 17.9 per cent. (Gartner's market share figures are slightly lower, but the growth rate is about the same.)

In the United States, Dell's market share in the fourth quarter came to 33 per cent (33.1 per cent for the year), meaning that every third PC shipped to the United States came from the Round Rock, Texas-based company.

Gateway, which merged with eMachines, and Apple also staged comebacks, but the two companies have fairly small market shares worldwide and in the states, so their increases didn't affect the overall rankings much. Apple's market share hovers around two per cent worldwide. In the States, Gateway has a 6.4 per cent share, and Apple clocks in at 3.3 per cent, according to IDC.

Hewlett-Packard, meanwhile, lost ground worldwide and in the United States, despite promotions such as offering free DVD burner upgrades to desktop buyers. Globally, HP grew shipments by nine per cent in the fourth quarter and 12 per cent for the year, according to IDC, slower than the market growth on both accounts.

HP also grew slower than the market in the states for the fourth quarter. Although HP was the number one PC manufacturer in the fourth quarter of 2003, it has trailed Dell for the last four quarters, and the distance is growing.

HP's market share is now about 16 per cent worldwide and about 23 per cent in the United States.

IBM, meanwhile, held on to the number three spot worldwide for the quarter and the year but moved to fourth place in the states due to the Gateway-eMachines merger. IBM sales dipped slightly after the announced merger with Lenovo, but sales then picked up in the second half of December, both IDC and Gartner said, as corporate buyers cleared out their annual budgets.

Michael Kanellos writes for CNET News.com.