MARKET WATCH - Recession fears hit growth

The uncertain economic outlook added an air of caution to corporate spending in 1998, but vendors still enjoyed brisk business as consumers took advantage of cut-price PCs.

UK SUMMARY: 1998

ic outlook added an air of caution to corporate spending in 1998, but vendors still enjoyed brisk business as consumers took advantage of cut-price PCs. The UK PC market, although still achieving a good growth rate of 18.6 per cent year-on-year, did not perform as well as France and Germany. As predicted last quarter, falling prices boosted demand in the consumer segment.

However, IT investments in the business sector were hampered by fears of recession.

In addition, the euro factor driving PC sales in other European SME and corporate markets did not apply to the UK market. Although many corporates took measures to get their IT systems ready for the new currency, smaller UK businesses did not see any urgency in investing time and resources in this area.

The UK PC market is one of the few European markets showing better performance in the first rather than in the second half of the year.

PC sales are expected to increase in 1999 due to continuous consumer demand and a pick up of salesthroughout the business sector. Entry into the single European currency would, of course, fuel growth beyond 2000.

UK SUMMARY: Q4 1998

Compaq built on its lead in the fourth quarter of 1998, with the main challenge coming from direct vendor Dell - posting more than 40 per cent growth for the second year running. However, Toshiba, IBM, and Fujitsu all registered less impressive shipment numbers than the same quarter the previous year. Toshiba's numbers dropped from 58,000 to 56,867, IBM's from 109,898 to 100,233, and Fujitsu's from 45,908 to 37,792.

Apple was the key success story last year, turning negative market growth of 28.9 per cent in to a positive growth rate of 57.8 per cent. Apple's overall market share in the quarter increased by just under 1 per cent, compared with the same quarter a year ago.

HP, which registered outstanding growth of 173 per cent in 1997, was unable to sustain the momentum in 1998, with 13.2 per cent growth.

Exclusive research for PC Dealer conducted by and copyright of Context (www.context1.com).