ASIA-PACIFIC: The IT World’s Silver Lining

So far 2000 has been a good year for the PC industry.According to IDC, though the global growth rate has slowed down from the Q1growth rate of 21% year on year, Q2 saw a growth by 15.1% over Q2 1999 withshipments touching 30.3 million units. However, of all the markets, theAsia-Pacific (APAC) market continues to record the fastest growth rate, touching35% in the second quarter. Compare this with the nearly saturated US market

with a 5% growth rate and the Europe, Middle-East and African (EMEA) marketswith 10% growth.

Worldwide, growths in Q2 were mixed, with the CPU shortagesand lack of demand from the corporate sector. Though the biggest market, the US,saw a strong home demand, the supply of desktops remained tight due to the CPUshortages. The quarter saw poor demand from the corporate markets of the US,Europe, Middle-East and Africa, resulting in a percentage decline in thesequential growth rate (Q2 compared to Q1) of the shipments. However, in spiteof the shortages, the global expansion continued in Q2, again riding on thestrong Asian and the home consumer demands.

Dell number one in the US

Dell is firmly in the number-one slot in the US market withabout 20% of the Q2 market, primarily at the cost of Compaq, which saw the gapwidening from the 0.1% difference with Dell in Q2 1999 to more than 5% now. ItsQ2 2000 market share was 14.8% as sales fell by 6% in the US market while Dellpowered ahead with 27% growth helped by its B2B e-commerce strategy. Worldwide,Compaq remained the numero uno, but with Dell close on its heels. Compaq couldmanage a growth rate of a mere 6% compared to Dell’s 22%. Unlike its globaland US performance, Dell has grown below the market growth in the EMEA marketwith just about 6% compared to an overall growth of about 10%. Also, unlike theglobal trend of US-based companies on the number one spot, in the Asian marketit is Legend, which is on the number one slot, followed by IBM.

On the global shipment basis, the situation is similar to Q1,where the US companies dominate with a count of four out of the top fivevendors.

Asia–the propeller

However, the key issue that all international players willhave to address, is their positions and market shares in the fastest growingmarket–Asia-Pacific. Even as the global shipments fell by about 9% in Q1 ascompared to Q4 1999 and by 1% in the next quarter, the Asian market has beenposting strong growths with 6% and 11% respectively, in the sequential quarters.No wonder, most of the international companies are trying hard to dominate thisgrowth market as the developed markets are nearing saturation. However, whetherinternational giants can dominate this market is a big question. Thoughinternational powerhouses lead the developed regions, the growth in the nextfive years will come from the emerging economies where local vendors are gettingstronger. In a short span of time, the local players, which still play on theprice points, have improved service and support structure and wider channelcoverage. Barring Taiwan, which declined by 11%, almost all of the Asia-Pacificcountries were on the upswing. The leader was Korea with 92% over itscomparative quarter followed by India with 74%. India has also increased itsmarket share from 6.5% in Q2 1999 to 8.3% in Q2 2000. However, India is still along way away from the leader China, which accounts for over 35% of the totalAsian market.

Global glimpses

For Q3, IDC predicts the global growth rate of 18.5% an ayear-on-year basis and about 10.1% growth over Q2 2000. The consumer market willbe the key driver for the PC growth in the quarter.

Also, IDC expects demand from the corporate accountsimproving in the second half as the Windows 2000 upgrade cycle moves into highergears.

Asia-Pacific (including Japan) is going to dominate themarket and continue with an impressive growth rate, pegged by IDC at 36%.However, whether international players will be able to replace the strong localplayers in the region is yet to be seen.

YOGRAJ VARMA

in New Delhi