Price cuts keep EMEA PC market afloat - but only just, IDC says

Intense vendor competition and continued price declines across all product categories helped stimulate demand, adversely impacting growth in terms of revenue and industry margins.

The market remained affected by slow demand overall, and Intel price cuts in November along with aggressive vendor pricing strategies across all channels clearly helped stimulate both consumer and business purchases. Without this, the market would have fallen back to negative trends. The corporate market continued to display very slow investment patterns, with only a few essential renewals taking place, and no major rebound is expected before 2H03. Adding to budget constraints, a "wait-and-see" stance among businesses on new products also contributed to continuing very slow corporate notebook sales. The SMB market remained more buoyant, but was very much driven by fierce vendor competition and consequent price declines.

On the consumer side, notebook sales remained buoyant, driven by low and very attractive pricing in the retail channel with fierce competition among vendors; however, this did not make up for the lack of desktop demand or aid overall consumer market growth.

In line with forecasts, notebooks continued to display double-digit growth at over 14% year-on-year and remained a key area of intense competition between vendors in both the consumer and the SMB space. Mobile products will continue to represent the largest growth opportunity in EMEA as wireless developments and a rebound in corporate rollouts will drive stronger double-digit growth in 2003. However, prices are expected to continue declining.

"2003 will be another very challenging year for the PC industry. While companies will continue to adopt cost-saving strategies and maintain tight control over IT budgets, businesses have become more price sensitive than ever. On the consumer side, prices will also remain a major volume generation and competitive weapon," said Karine Paoli, IDC's EMEA Personal Computing Expertise Center Manager. "Further price declines in 2003, especially in the notebook space, will continue to affect margins and vendors will have no other choice than to rationalize costs, while at the same time investing in innovative approaches to better understand and address their markets and customer needs," she added.

Vendor Performance Highlights
While HP and Dell continued to drive pressure on the market, the competitive landscape has intensified in the fourth quarter. With Acer taking the fourth position in the overall EMEA ranking, and second position in the notebook space, along with the strong positions held by regional/local players across most countries, this fiercely competitive environment will continue to shape the PC market in 2003. In a context of slow demand where pricing will remain a key volume generation weapon, vendor competition is not expected to soften in 2003.

HP maintained the gap and a clear leadership in EMEA; however, the vendor declined by 11% compared with the combined shipments of HP and Compaq in the same period last year. Considering the scale of the merger and fierce competition from all sides, the leader's aggressive pricing strategy and a well executed transition enabled HP to maintain over a 20% share in the EMEA market for the year 2002.

Dell continued to outperform the market and record strong share gains across all form factors. Able to take advantage first of Intel price cuts in November, the direct vendor continued to maintain pressure on the market across the region with continued expansion into the SMB and consumer markets, and increasing its share in the major European markets outside the UK.

Fujitsu Siemens displayed another healthy quarter, holding well against competition in and outside Germany. An improved distribution channel strategy in the SMB market, good product and price positioning, and continued focus in the mobile computing space contributed to the vendor's performance in the region. Acer again recorded the strongest performance in EMEA with over 27% growth, and took the fourth position in the overall ranking, outpacing IBM, and the number two position in the notebook space. Continuing to display an aggressive strategy in the notebook market (with notebooks representing more than 50% of the vendor's shipments), low pricing, and an extended distribution network, Acer is consolidating its positions across Europe, clearly challenging the leaders in the market.

IBM recorded sustained performance overall, despite the absence of the vendor from the consumer market and the weakness of corporate demand. Although facing fierce competition in the SMB market, IBM continues to hold well thanks to increased competitiveness.

Toshiba continues to hold well against competition in the notebook space, although growth was moderate at the European level. An outstanding performance in the UK, where the vendor recorded over 37% growth, clearly contributed to the vendor's sustained results in the region.

Sony recorded strong performance with over 50% growth compared with last year. While facing intense competition in the consumer notebook space which led to a softer double-digit growth in this segment, continued success of its desktop product line assisted the vendor's overall performance. NEC CI displayed a soft performance overall; however, the vendor maintained a strong position in the consumer market thanks to attractive product and price positioning across both desktops and notebooks. Apple recorded healthier trends in its first fiscal quarter, driven by strong consumer sales across both its desktop and notebook product lines.