News Analysis

EMEA PC market growth boosted by proliferation of low-priced notebooks in Q2 2005

For the third quarter running, the EMEA PC market has surpassed expectations, expanding by more than 23% year on year in 2Q05, according to preliminary data released today by IDC's EMEA Quarterly PC Tracker.

Outpacing forecasts in unit terms, market value is likely to remain constrained, however, as the proliferation of entry-level price points across the market has been a major driver behind the unit growth levels observed. The continued rise of the dollar has also motivated many channel players to order systems ahead of the forthcoming back-to-school season, further boosting "sales in" shipment levels.

Consumers continued to respond very positively to increasingly attractive price points, which assisted strong double digit growth in both the consumer notebook and desktop market. The proliferation of offerings under 599 euros launched by most major vendors - in both the retail channel and directly - has undoubtedly contributed to the momentum around portable PCs and stimulated purchases. On the desktop front, sales also displayed healthy trends, as attractive digital entertainment solutions continue to stimulate replacement cycles in the homes.

Businesses also benefited from declining price points, which assisted further notebook penetration, particularly in the SME market. Coinciding with improvements in data and hardware security, growth of commercial notebook sales remained robust. Cautious spending in the corporate space continues, however, to lead to more moderate growth of commercial shipments overall.

"These positive unit growth results are very encouraging and show continued market responsiveness to demand stimulants and confirm a high end-user price elasticity but revenue growth remains, as expected, much lower. Increased channel inventory, with many distribution players keen to stock up for the lucrative back-to-school season while prices are low, have also had an additional boosting impact this quarter on "sales in" shipment levels," said Karine Paoli, research director for IDC's European Personal Computing group. "Declining ASPs due to a shift in the product mix towards lower price bands have undoubtedly been an influential factor in Q205 and may provide some insight into what lies ahead in Q3."

"Although the current notebook phenomenon boosted growth across most countries in Western Europe - and particularly in Southern Europe - performances remained mixed in the region," added Elsa Opitz, research manager for IDC's EMEA Quarterly PC Tracker. "The business market in Germany and Italy is still affected by fragile economic conditions, for instance, while renewal trends are slowing down in the UK, and the Nordic region continued to enjoy very healthy growth rates."

CEMA (Central Eastern Europe and Middle East and Africa) also recorded outstanding growth levels, contributing to further lift overall EMEA growth. According to Tomas Oupicky, senior analyst in IDC's CEMA Systems group, "The healthy economic environment and increasing demand for low-price machines are assisting the continued expansion of the PC market in CEMA. Notebooks are rapidly gaining share, growing by close to 100% this quarter, whilst desktops remain the dominant force driven by low cost and competitive deals across all end-user segments and company sizes."

In terms of outlook for the remainder of the year, unit growth will be higher due to notebook sales, however in revenue terms forecasts are likely to remain the same. Challenges in the market remain high though, with competition in the notebook space unlikely to soften with increasing pressure felt from dedicated Asian mobile vendors who are making increasing inroads into the European market.

Vendor Highlights
HP has experienced healthy growth driven by very competitive offerings in the consumer space and notebook market, despite fierce competition from all parts. A refresh of its desktop product line has also had a positive effect, with the region's top vendor proving that it can continue to compete effectively across all product lines.

Dell continued to outpace the EMEA market, again recording robust double-digit unit growth. As it closes the market share gap with HP across all form factors, the direct vendor's performance in the commercial market continues to be assisted by new wins and a continually enhanced consumer profile through a number of very attractive home offerings.

FSC also continued to perform well with continual focus on mobility and growth in the SMB market. The vendor also maintained a strong performance in the consumer space whilst continuing to expand and gain share outside Germany thanks to a competitive offering and stronger relation with the channel across EMEA.

Acer continues to drive fierce competition in the notebook market with aggressive price points and attractive offerings meeting the demand of the retail channel across the region. The vendor also delivered a strong performance on desktops and actively prepared the forthcoming back-to-school season.

IBM/Lenovo displayed a soft performance as a result of fierce competition and a difficult year-on-year comparison as the former IBM PCD had recorded a strong quarter in 2Q04. Lenovo benefited from sustained commercial demand, however, and performed well despite the additional challenge of the transition to the new entity.

Top 5 Vendors: Europe, Middle East, and Africa (EMEA) PC Shipments Second Quarter 2005 (Preliminary) (000 Units) (Embedded image moved to file: pic04872.jpg)

Source: IDC


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