22 July 2002 Aggressive pricing by hardware vendors has failed to offset a slowdown in PC sales in Europe. In the second-quarter of 2002, PC shipments in the Europe, Middle East and Africa region fell by 2.2% compared to the same quarter a year ago, according to IDC. Overall revenues for the region were dragged down by a 6% year-on-year slump in Western Europe.

PC vendors were badly affected by slow sales to large corporate customers. Shrinking corporate IT budgets continue to hold back large upgrade projects. Significant price cuts in June, only partially managed to offset the lack of sales activity in May 2002.

The only bright spot was in the small and medium-sized business sector where sales were much stronger.

In the short-term, Hewlett-Packard’s acquisition of Compaq should further drive down prices for end-users, believes IDC analyst Karine Paoli. “During the quarter, HP’s aggressive pricing aimed at accelerating the product transition in the channel helped boost volumes, but the vendor’s results remained affected by slow demand,” said Paoli.

Although the acquisition helped HP overtake Dell to become market leader with a share of 20.8% in EMEA, this was actually down by 2.4% on the combined results of both entities for 2001. Analysts expect Dell to retake market leadership soon.

Meanwhile, in the consumer market, demand for laptop PCs remained healthy with fierce competition raging in local retail channels, said Paoli. This has been intensified by the entry of second-tier PC vendors into the market, many cutting costs by using cheaper desk-top PC microprocessors in their notebook offerings.