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10/24/2000

Healthy Consumer Demand And Strong Notebook Sales Continue To Drive PC Market Growth In Europe, Middle East, And Africa, IDC Says

LONDON — OCTOBER, 24, 2000 — Driven by booming notebook sales and healthy consumer demand, PC shipments in Europe, Middle East, and Africa (EMEA) increased 13% in 3Q 2000 compared with the same period last year, according to preliminary data released today by IDC. Sluggish business demand for desktops and servers, coupled with a strong dollar, however, penalized most vendors' results in EMEA.

PC sales in Western Europe increased 11.7% year on year. Eastern Europe and Middle East and Africa continued to display very healthy increases with 16% and 21% year-on-year growth, respectively.

Due to a very slow recovery of corporate investments in most European countries and a strong wait-and-see approach from small and medium-sized businesses, commercial desktop and PC server sales experienced another very soft quarter.

The French market continued to be the most affected, with server sales again declining year on year. Germany also witnessed a strong slowdown in commercial desktop demand as a result of decreasing confidence in the economy. Only the United Kingdom saw sustained business sales, with a clear corporate rebound.

"Corporate and medium-sized businesses have clearly marked a pause in their hardware renewal cycles throughout 2000. If we are starting to see desktop and server investments slowly picking up, we do not expect any significant rebound in business demand and/or Windows 2000 rollouts before the first half of 2001.

The shift in demand toward more notebook purchases is expected to continue, however," said Karine Paoli, manager of IDC's EMEA Personal Computing group.

Despite the weakness of European currencies, consumer sales remained very healthy across the region, driven by robust demand for Internet access and increasing PC penetration in Southern Europe.

Notebook shipments continue to experience strong double-digit growth across the region (growing at more than 40% year on year), fueled by strong business and consumer demand.

"Major investments in notebook replacements ahead of desktop machines, improvements in total cost of ownership issues, and decreasing prices continue to drive notebook sales in the business environment," said Andrew Brown, senior research analyst for IDC's Personal Computing group. "Greater flexibility and wireless developments have prompted many users to purchase notebooks to benefit from greater functionality and improved productivity."

Vendor Performance Highlights

The leaders' performance remained affected by the sluggishness of business demand, with Compaq and Dell experiencing single-digit growth rates and Fujitsu Siemens' performance directly affected by the German market's weakness. Only IBM and Hewlett-Packard showed sustained double-digit growth rates. The strongest performance came from notebook and/or consumer-oriented vendors, among them: Toshiba, Acer, NEC, and Apple, which all experienced strong double-digit increases of their shipments.

Compaq retained leadership of the EMEA market, although slow commercial desktop and server sales affected the leader's overall performance at 7.9% year-on-year growth. Benefiting from the corporate rebound in the United Kingdom and stronger positioning, Compaq regained the number-one position in the second-largest European market. Compaq also continued to experience strong double-digit growth in the notebook market, closing the gap with the leader Toshiba.

Fujitsu-Siemens ranked number two in EMEA although growth was negative, as the vendor's results were seriously affected by the weakness of the German business market as well as strong competition from the leaders in other European markets.

Fujitsu-Siemens, however, experienced sustained growth of its notebook as well as consumer desktop sales. Among the challenges of the German leader outside its national market, especially in the SMB market, is channel and brand consolidation.

Dell's performance in the third quarter continued to be hindered by sluggish business investments. The slow rebound of corporate sales across Europe and fierce competition in the small and medium-sized business market made it hard for Dell to sustain double-digit growth. As a result of a soft performance in the United Kingdom and a decline of its shipments in France and Germany, the direct sales leader recorded only a 4.1% unit growth year on year. Dell, however, continues to record strong notebook growth.

IBM's impressive rebound in EMEA can be attributed to significant gains across the region. IBM gained the number-two position in France thanks to very strong consumer sales. Big Blue also gained the number-two position in Italy – all products included – as well as the number-two position in the German notebook market due to impressive growth of its notebook sales. Also contributing was IBM's strong performance in Eastern Europe and the Middle East.

Hewlett-Packard continued to perform well in EMEA with another strong double-digit growth of 30% in 3Q 2000 compared with the same quarter last year.

HP's strong performance in the corporate as well as SMB desktop market remained driven by increased competitiveness and strong channel relationships. HP also continued to record strong gains in the notebook segment as well as in the consumer market with its successful Pavillion product line.

[Table omitted]

Shipments are branded shipments and exclude OEM sales for all vendors.

* Data for all vendors are reported for calendar periods.

* Data for Compaq includes Compaq, Digital Equipment, and Tandem products.

* Data for Fujitsu-Siemens includes shipments for Fujitsu and Siemens.

* Data for NEC CI includes shipments for NEC and Packard Bell.

Source: IDC EMEA, Preliminary Results, 3Q 2000

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

www.idc.com.

IDC is a division of IDG, the world's leading IT media, research, and exposition company.

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