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Booming Portable Adoption Continues to Drive EMEA PC Market Growth in 1Q'07

Driven by continuing demand for portable systems across the region, PC sales in Europe, Middle East & Africa (EMEA) outpaced expectations in the first quarter of the year, according to preliminary data released by IDC. Total PC shipments rose 13.2% compared with the first quarter last year, reaching 19.4 million units, with notebook sales recording a solid 34.3% year on year.

Desktop shipments remained flat compared with last year, but unabated demand for Portables, particularly in the Consumer segment and in CEMA, boosted overall growth. Market leaders HP and Acer continued to gain share with Toshiba, Packard Bell, and Asus also registering strong growth. Dell continued to suffer from slower corporate demand and retail competition in the consumer space while Fujitsu Siemens and Lenovo shipments increased but trailed the market.

"Booming notebook sales across the entire region continued to act as the primary growth driver for most vendors", said Karine Paoli, research director for IDC's Personal Computing group. "Consumer demand for portables in Western Europe remained very strong, driven by an extensive product offering and increasingly attractive designs, while intense competition between the players maintained price points at very aggressive levels and drove a solid 40% growth of consumer notebook sales. And the creation of a growing installed base since 2004 will contribute to maintain solid double-digit trends over the next two years while creating up-sell opportunities as consumers' requirements get more defined and sophisticated."

"The acceleration of portable adoption is also evident in particular in the CEE (Central Eastern Europe) region where notebook sales grew by over 70% overall, driven by a growing consumer market, increasing household purchasing power and strong economic growth, and at the same time, declining price points as international players increasingly battle for share", said Stefania Lorenz, program manager, Hardware and Systems Group, IDC CEMA.

As a result, notebooks have outpaced desktop volumes across most countries in the region. "Notebooks represented again this quarter over 50% of total PC sales in Western Europe while accelerating demand in the CEE region also boosted the notebook ratio to more than 50% in Czech Republic or Hungary, for instance", commented Eszter Morvay, senior analyst for IDC's EMEA PC Tracker. "Notebooks are also growing at fast rates in the Middle East, representing twice the volume of desktops in Saudi Arabia, for example."

Vista did not act as a major market booster in Q1 but combined with processor migrations, certainly contributed to assist growth and some replacements in the desktop space in particular, helping to prevent higher desktop volume contraction.

"While consumer demand for notebooks and continued growth in CEMA will remain the key market drivers throughout 2007, the second half of the year should also benefit from a gradual uptake of commercial renewals, which leads us to remain confident on the short term outlook", added Karine Paoli. "Vendor and price competition will remain fierce across all segments and revenue growth is likely to display more moderate trends, forcing industry players to find an effective balance between share and profitability levels."

Vendor Highlights

HP maintained pressure and a strong leadership in the market, recording a robust 25% growth overall and continued success in particular in the notebook space at 57% year on year, assisting significant share gains across both desktop and notebook form factors. HP continued to leverage from a solid product line up, a strong campaign and effective execution on the retail channel, and deploy a very competitive strategy in the commercial space across both the SMB and corporate segments.

Acer continued to deliver the fastest growth trend overall among the top 5 players, maintaining solid growth in the notebook space at over 46% but also managing to post an outstanding 48% increase in the desktop space. The Taiwanese vendor held very strong positions in the notebook market in both the retail and SMB channels across the EMEA region, but it also increased pressure in the consumer desktop space in Western Europe.

Dell recorded another soft quarter with a slight contraction of overall shipments, as the vendor continued to suffer from slow corporate demand and from the competition of the retail channel in the consumer space. Not benefiting from the visibility and customer reach that this latter offers, the lack of product display and immediate availability due to the vendor's sole direct and online presence also prevents Dell from making the most of the current consumer market buoyancy.

Fujitsu Siemens returned to more positive trends in the first quarter after a slower 2H06. Performance was patchy across Western Europe but improved competitiveness and supply chain, in particular in the notebook space, and a more effective selling strategy allowed FSC to hold up well against HP's increased competition in Germany, for instance, and take the 5th position in the UK with an outstanding 90% growth, while continuing to post strong results in the CEE region.

Toshiba continued to deliver a solid performance in the notebook market and maintain the 5th position in the overall EMEA ranking, thanks to a strong product portfolio, an active retail strategy in Western Europe and continued expansion in CEE. While Toshiba benefits from the evolution of the market towards second and third time buyers, the vendor nevertheless faces tough competition from all other players.

Lenovo and Packard Bell, ranking 6th and 7th respectively, also recorded healthy performances for the quarter. Lenovo returned to an encouraging 14% growth while Packard Bell posted a strong quarter in the consumer segment. Asus also continued to grow share in the notebook market and captured the 8th position overall.



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