05/11/2005 - Updated 09:51 PM ET
Page 3B
U.S. companies' dominance in PC industry slipping
By Michelle Kessler USA TODAY
http://www.usatoday.com/printedition/money/20050512/pc.art.htm
SAN FRANCISCO — The days when the USA dominated the PC industry appear to be coming to an end.
Dell reports quarterly earnings today and is expected to post strong numbers, allowing it to stay the No. 1 PC maker worldwide by a large margin.
But Dell increasingly is standing alone as a U.S. PC powerhouse. And, like almost all PC makers, it's moving some operations abroad as foreign markets gain in importance.
That's a big change for an industry created by IBM and dominated by U.S. firms such as Hewlett-Packard and Compaq Computer for more than 20 years.
“None of the (desktops and notebooks) are manufactured here,” says PC analyst Samir Bhavnani with researcher Current Analysis. Increasingly, they're also being designed in other countries, he says.
U.S. clout is slipping because of:
•Turmoil at U.S. PC makers.
No. 2 PC maker Hewlett-Packard ousted CEO Carly Fiorina in February after the company failed to see expected gains from a merger with Compaq. New CEO Mark Hurd must figure out what to do with a struggling PC unit that's marginally profitable. Some Wall Street analysts want him to sell it.
No. 3 IBM did that this month, selling its PC unit to Chinese PC maker Lenovo.
Gateway, once another U.S. PC giant, is No. 9 after a five-year slide. The company closed its retail stores, laid off more than 5,000 workers and merged with eMachines. Even so, Gateway lost $5 million last quarter.
•Gains by foreign PC makers.
Taiwanese PC maker Acer, once known as a low-cost Asian PC industry player, has made huge gains in Europe. Its shipments rose 36% in the first quarter from a year ago, Gartner says.
The strength of the euro helped Fujitsu/Fujitsu Siemens grow 10% during that time, slightly faster than the market, says Gartner PC analyst Martin Reynolds. Toshiba's laptops are a recent hit among U.S. consumers, accounting for about 30% of retail laptop sales in April, Current Analysis says.
•Slowing growth in the USA.
The USA has always been the world's biggest user of PCs, accounting for about 40% of the market in recent years, Reynolds says. But now, most Americans who want PCs have them, and buy new ones only when their old ones break.
In other countries, especially India, China and Eastern Europe, people who have never owned PCs are shopping. Worldwide sales rose 10% in the first quarter compared with a year ago, though sales rose only 2% in the USA, Gartner says.
U.S. PC makers are shifting focus and resources. In the first quarter, H-P sold 62% of its PCs internationally, while IBM sold 73% in other countries, says analyst Roger Kay with researcher IDC. Last month, Dell opened a new design center — in Singapore.
Tech analysts say the trend is part of an inevitable shift toward globalization. To survive, U.S. PC makers must adapt to the new market, they say.
================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu
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