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 Q1

growth rate of 21% year on year, Q2 saw a growth by 15.1% over Q2 1999 with

shipments touching 30.3 million units. However, of all the markets, the

Asia-Pacific (APAC) market continues to record the fastest growth rate, touching

35% 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) markets
with 10% growth.

Worldwide, growths in Q2 were mixed, with the CPU shortages

and 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 CPU

shortages. The quarter saw poor demand from the corporate markets of the US,

Europe, Middle-East and Africa, resulting in a percentage decline in the

sequential growth rate (Q2 compared to Q1) of the shipments. However, in spite

of the shortages, the global expansion continued in Q2, again riding on the

strong Asian and the home consumer demands.

Dell number one in the US

Dell is firmly in the number-one slot in the US market with

about 20% of the Q2 market, primarily at the cost of Compaq, which saw the gap

widening from the 0.1% difference with Dell in Q2 1999 to more than 5% now. Its

Q2 2000 market share was 14.8% as sales fell by 6% in the US market while Dell

powered 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 could

manage a growth rate of a mere 6% compared to Dell’s 22%. Unlike its global

and US performance, Dell has grown below the market growth in the EMEA market

with just about 6% compared to an overall growth of about 10%. Also, unlike the

global trend of US-based companies on the number one spot, in the Asian market

it 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 five

vendors.

Asia–the propeller

However, the key issue that all international players will

have to address, is their positions and market shares in the fastest growing

market–Asia-Pacific. Even as the global shipments fell by about 9% in Q1 as

compared to Q4 1999 and by 1% in the next quarter, the Asian market has been

posting strong growths with 6% and 11% respectively, in the sequential quarters.

No wonder, most of the international companies are trying hard to dominate this

growth market as the developed markets are nearing saturation. However, whether

international giants can dominate this market is a big question. Though

international powerhouses lead the developed regions, the growth in the next

five years will come from the emerging economies where local vendors are getting

stronger. In a short span of time, the local players, which still play on the

price points, have improved service and support structure and wider channel

coverage. Barring Taiwan, which declined by 11%, almost all of the Asia-Pacific

countries were on the upswing. The leader was Korea with 92% over its

comparative quarter followed by India with 74%. India has also increased its

market share from 6.5% in Q2 1999 to 8.3% in Q2 2000. However, India is still a

long way away from the leader China, which accounts for over 35% of the total

Asian market.

Global glimpses

For Q3, IDC predicts the global growth rate of 18.5% an a

year-on-year basis and about 10.1% growth over Q2 2000. The consumer market will

be the key driver for the PC growth in the quarter.

Also, IDC expects demand from the corporate accounts

improving in the second half as the Windows 2000 upgrade cycle moves into higher

gears.

Asia-Pacific (including Japan) is going to dominate the

market and continue with an impressive growth rate, pegged by IDC at 36%.

However, whether international players will be able to replace the strong local

players in the region is yet to be seen.

YOGRAJ VARMA



in New Delhi