Reports Consumer Desktops Post Healthy Gains At Retail In 1999

PORT WASHINGTON, NEW YORK, January 28, 2000– The 1999 PC industry tumult included mergers, changing distribution strategies, the threat of new Internet appliances, Internet service provider frenzy and free-falling prices. In the midst of it all, retail sales of consumer desktop PCs were up 37% in unit terms over 1998, according to leading marketing information provider NPD INTELECT. Despite price competition across the industry, the category’s dollar growth for 1999 was 9%.

Market leaders Compaq and Hewlett Packard posted strong gains: Compaq posted 58% unit growth, and Hewlett Packard posted 80% unit growth. Another 1999 standout was EMachines, which introduced a line of bargain PCs and grabbed 13% unit share. Apple reinvigorated itself with its new iMac offerings, earning 3% unit share for 1999 and 177% unit growth over 1998.

“Price declines were a main driver of category growth in 1999. EMachines’ super-low prices attracted consumers who may not have purchased PCs otherwise. HP and Compaq fed the trend by introducing their own offerings at low price points, providing more purchasing options at very appealing, very low price points,” said Sima Vasa, NPD INTELECT divisional vice president for technology products.

Lowered price points were joined in the marketplace by other factors that contributed to the retail consumer desktop PC category’s healthy gains. ISP retailer alliances introduced during the third quarter served as a major stimulus of 1999 growth in the retail consumer desktop PC segment. During that period, July, August and September growth was 50%, 54% and 57%, respectively. Rebate offers for consumers who signed Internet service agreements drove consumers to retailers’ doors during the prime back-to-school period.

In the battle for consumer desktops at retail, Compaq led in unit terms with 33% unit share for 1999. Hewlett Packard held the top spot in dollar share with 35% of the market. Together, HP and Compaq, along with EMachines and Apple, picked up share upon the exits from retail of two former consumer desktop frontrunners: Packard Bell and IBM. IBM’s decreased dollar share reflected the company’s shift away from retail sales of consumer desktops, although it continued to compete at retail with its line of Thinkpad notebook computers.