BBC Friday, 20 April, 2001, 12:38 GMT 13:38 UK Dell becomes world's top PC maker

Dell has adopted an aggressive pricing policy Dell Computer Corp of the US has swept past Compaq to become the world's top personal computer (PC) maker by market share.

According to leading US market researchers Gartner Dataquest, Dell shipped 4.16 million PCs, or nearly 13% of the global market, during the first three months of 2001.

That pushed its rival Compaq, which shipped 3.9 million PCs, into second place.

The figures were backed up by another top US market research group IDC, which said that Dell was slightly over, and Compaq just under, four million units.

"It was going to happen at some point that Dell would overtake Compaq," said IDC's spokesman Roger Kay.

"But it happened far sooner because Dell has gotten more aggressive on PC pricing," he added.

Direct sales

Dell sells directly to customers, rather than depending on a network of distributors or retail outlets for sales.

Its main rivals Compaq and Hewlett-Packard rely on distributors.

Last year, because of the worldwide slowdown in sales, both companies built up big stocks of unsold computers.

This led them to cut back the number of PCs shipped in the first quarter of 2001.

Dell also opted to reduce its profit margins for the quarter to 18% from 21%, thus allowing it to push down further the price of its computers and increase market share.

Competitors not moving fast enough

"Right now they [Dell] are absolutely strangling the market with their aggressive product pricing declines," said IDC's Roger Kay.

"Their competitors can't move fast enough to pass along the lower component prices," he added.

Among the top PC makers, only Dell and IBM saw a growth in their market share in the quarter.

Compaq had been the top PC maker in terms of shipments since the early 1990s, when it overtook PC pioneer IBM.

IBM is now in the number four spot worldwide, with Hewlett-Packard at number three.

Declining US sales

Total PC sales in the US declined in the first quarter of 2001 for the first time since records began in the mid-1980s, according to Gartner Dataquest.

They showed a 3.5% drop to 10.9 million units sold.

"This is the slowest growth we've ever seen," said Gartner Dataquest analyst, Todd Kort.

"We feel that the US economic slowdown has started to spill into other regions," he added.

Global PC sales inched up 3.5% in the period to 32.5 million units.

A survey of retailers earlier suggested annual US PC sales had in 2000 fallen for the first time ever.

In the previous two decades, the PC industry had recorded double-digit growth rates each year.

-- Anonymous, April 20, 2001