WORLDWIDE PC INDUSTRY EXPERIENCED 15% GROWTH IN FIRST QUARTER 2000.

Driven by strong growth in Asia/Pacific, Japan and Latin America, worldwide personal computer shipments grew 15 percent during the first quarter of 2000, according to preliminary statistics by Dataquest Inc., a unit of Gartner Group Inc. (NYSE: IT and ITB). Worldwide PC shipments surpassed 29.9 million units in the first quarter of 2000, up from 26 million units in the first quarter last year.

"The Asia/Pacific region continues to recover economically, and with it, demand for technology is strengthening," says Charles Smulders, principal analyst for Dataquest's Personal Computers Worldwide program. "Growth in Korea was especially strong as a result of government initiatives to drive investment. Japan's growth was also related to these issues coupled with a traditional strength of the first quarter because of the end of the fiscal year. Latin America had a healthy quarter with the consumer segment performing well. Western Europe had a weak commercial market, but it had better performance in the home segment."

HP posted the strongest growth among the top-tier vendors based on the continued success of its Pavilion series. Because of its decision to withdraw its desktop computer line from US retail plus a poor performance in the commercial market, IBM experienced the strongest decline among the top-tier vendors. Dell also saw a slowdown of growth in the quarter, but nevertheless moved closer to threatening Compaq for the No. 1 position in the worldwide market.

The top-tier PC vendors in the United States accounted for 68 percent of PC shipments in the first quarter of 2000, and this consolidation within the market is causing a price increase for PC systems in some segments. Dataquest analysts said the exit of Packard-Bell NEC and IBM from the retail segment is also affecting PC pricing.

eMachines and HP showed the highest growth rate among the top-tier vendors in the United States, with increases of 80 and 74 percent, respectively. At the end of 1999, Dell had moved into the No. 1 position in the United States, and in the first quarter of this year it maintained its lead over Compaq by 0.4 percent.

"In the United States, installed base saturation is becoming an increasingly significant factor in determining overall commercial market growth rates," Smulders say. "Saturation is forcing vendors to deliver new types of systems to maintain solid growth rates. Key in this planning are the emerging issues of small form factor, such as Compaq's iPAQ and HP's e-Vectra PC."

Smulders will provide additional analysis on the PC marketplace during the upcoming Gartner's Dataquest Predicts 2000 Conference, to be held May 1-3 at The Westin Santa Clara. Members of the press can register for the conference by contacting Josh Lefkowitz at 212-320-2335, or at [e-mail]. Additional information on the event is available on Gartner's Web site at http://www.gartner.com/public/static/events/ven/ven.html. (See Table 1 and 2 on page 7).