American PC Sales Slow Sharply.

In an ominous sign for PC vendors, US sales of desktop computers have slowed sharply in the past three months as corporate customer's debate whether to upgrade and consumers ponder the need for expensive replacements.

While quarterly data from research firms Dataquest and IDC differed by several percentage points on an increase in worldwide sales, both firms' data suggested US sales continue to drag as relatively cheap, powerful PCs saturate the market.

On the corporate side, sales have slowed as many companies delay purchases while deciding whether they should upgrade to any of several Windows 2000 product offerings comings this year from Microsoft Corp., says Dataquest analyst Charles Smulders.

"We've advised clients to take a cautious approach and fully test a new version of an operating system before deploying," Smulders said. "As a result, we expect Windows 2000 buying won't have a significant impact on (PC sales) growth and upgrades until the fourth-quarter of the year."

Dataquest found worldwide shipments rose 18 percent to 31.6 million units aimd strong sales in Asia-Pacific and Japan as businesses and consumers rushed to catch up on the Internet phenomena in their recovering economies. US sales rose 11.7 million units, up 11.5 percent - the smallest quarterly gain in more than two years.

Smulders warned US sales would slow further unless manufacturers off consumers and businesses next-generation computers that are even more powerful and stylish than offerings currently on the market.

For now, manufacturers are having trouble getting the necessary parts to keep pace with current demand. The two biggest chip makers, Intel Corp. and Advanced Micro Devices Inc., both said they were caught off guard by the first-quarter demand. Intel, in particular, had trouble producing an adequate supply of high-end microprocessors.

In the race for PC market share, Dell Computer Corp. and Compaq Computer Corp. continued to duel. Dell extended its lead in US market with roughly 19 percent market share to Compaq's 14 percent as Dell continues to win big corporate customers, according to both Dataquest and IDC. Compaq remains the worldwide PC sales leader, with a roughly 13 percent to 11 percent market share lead on Dell, which continues to gain, the groups said.

Hewlett-Packard Co.'s popular Pavilion series for consumers helped boost its sales 45 percent to become the No. 3 US leader and defended a challenge from IBM Corp. for the same spot worldwide. Gateway Inc. was the fourth-largest seller in the US, followed by IBM Corp.