Data from market researchers Gartner Dataquest and IDC has found the market for desktop, notebook and PC servers fell two percentage points to around 30 million units shipped during the second quarter.
Dell, which became the world's No 1 PC maker during the first quarter after displacing former leader Compaq Computer, was the only top-tier vendor to grow both worldwide and in the United States in the latest quarter.
"It's real simple. Dell cleaned up," Loren Loverde, head of IDC's worldwide PC tracker program.
Dell shipments increased particularly in Japan, Asia/Pacific and Latin America, with 30 percent to 50 percent growth there, according to preliminary Dataquest data. Dell's growth rate was 20.2 percent for the quarter ended in June.
Compaq saw second-quarter shipments drop 14.4 percent, while IBM, Hewlett-Packard and NEC Corp, the No 3-5 ranked PC makers respectively, each fell by single digits.
The second quarter was the first time the worldwide PC market has had a negative growth rate since 1986, according to Dataquest.
"This is the first time we've had a worldwide decline since 1986 on a year-over-year basis," said Todd Kort, principal analyst at Gartner. "Among the top five vendors in the US, Dell was No 1. They had a share of 23.6 percent of the market."
While IDC and Dataquest numbers generally agreed on the downward trends in the market, they differed slightly in actual numbers that reflect marginally different definitions of what sorts of server PCs each includes in their surveys.
Servers are PCs used to manage networks of other PCs.
Asia sales far worse, Europe weak, US as bad as feared Shipments to Asia fell far more sharply than previously forecast, and Europe shipments also lagged. The US market, while the hardest hit, fell in line with previously lowered expectations, according to IDC.
The Japanese market was down year-to-year and appears to be following the US trend, IDC's Loverde said.
Dataquest said that while by historic patterns Europe is overdue for one of its periodic once-every-three-years-or-so upgrade cycles, the region looks set to post a decline in growth, joining the US market, which has fallen back two quarters running.
Dataquest figures showed the US market fell 6.1 percent to 10.7 million total units shipped in the second quarter while IDC data showed an 8 percent drop during the same period.
"Without a major shift in the PC industry structure, future sustained high-growth rates are improbable," said Todd Kort, principal analyst of Gartner Dataquest's Computing Platform Worldwide group.
"For the time being, vendors continue to opt for price cutting rather than changing PC design to stimulate growth," he said.
Kort said the Western European market will show a low single-digit percentage decline during the second quarter. Japan grew about 5 percent, year-over-year. The Asia Pacific region as a whole will grow about 9 percent year over year. Latin America will grow about 11 percent year over year.
Threat of ever greater downward spiral
Dataquest warned that a downward spiral threatened to envelop the industry if dramatic changes are not made in the industry in short order. Facing flagging sales, PC makers are focusing on managing their profit margins, even as a price war slashes profitability. In response, all major PC makers have announced big job cuts. These pressures threaten to hurt customer satisfaction with PC product quality, Dataquest said.
Roger Kay, also of IDC, said the only silver lining in the industry figures were that while declines continued, they appear to reflect normal sequential patterns of first half sluggishness, typically followed by second-half strength, albeit at lower levels.
Any industry rebound is likely to begin in the United States, the earliest to enter the economic downturn, but will depend on the strength of back-to-school PC sales in the third quarter and end-of-year holiday sales in the fourth quarter. Microsoft's introduction of its upgraded consumer operating system, known as Windows XP, could act as a mild stimulus.
"US stability will really help other regions," Loverde said of the impact an economic recovery in the United States would have on PC fortunes worldwide. However, he predicted that a US PC market recovery may not show up until late this year or early next.
