SAN JOSE, Calif., July 18, 2002 - While hopes were raised in the first quarter that the PC industry was showing the first signs of recovery, the industry suffered a slight setback as worldwide PC shipments in the second quarter of 2002 declined 0.6 percent from the same period last year, according to preliminary results from Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB).

Worldwide PC shipments totaled 29.9 million units in the second quarter of 2002 (see Table 1), while PC shipments in the United States reached 10.6 million units, a 0.8 percent decline from the previous year (see Table 2).

"The market undoubtedly saw the effects of inventory overhang from the first quarter, but at the same time we have yet to see any significant return to corporate buying, and in the consumer market buying appears to have fallen back further in some regions," said Charles Smulders, vice president of Gartner Dataquest's Computing Platforms Worldwide group. "Economic uncertainty continued to undermine business confidence, which has been further compounded in the United States by the Enron and WorldCom MCI accounting scandals."

The combination of Hewlett-Packard and Compaq moved it into first place in the worldwide rankings, but just 0.6 percentage points higher than Dell. While the new HP gained the No. 1 position in the quarter, it experienced a 16.1 percent decline in shipments.

Table 1
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2Q02 (Thousands of Units)

Company	2Q02 Shipments	2Q02 Market Share (%)	2Q01 Shipments	2Q01 Market Share (%)	Growth (%)
Hewlett-Packard	4,627	15.5	5,517	18.3	-16.1
Dell	4,459	14.9	3,944	13.1	13.1
IBM	1,960	6.6	2,145	7.1	-8.6
NEC	1,045	3.5	1,147	3.8	-9.0
Toshiba	896	3.0	849	2.8	5.5
Sony	830	2.8	672	2.2	23.7
Others	16,079	53.8	15,807	52.5	1.7
Total Market	29,895	100.0	30,081	100.0	-0.6

"HP's decline is based on three factors: first, inventory adjustments being made during the integration process; second, its reliance on the weak performing U.S. retail segment; and third, business disruption as a result of the merger process," Smulders said. "We expect the third and fourth quarters to be a better measure of the success of the merger strategy."

Dell was the only top five vendor, both worldwide and in the United States, to experience double-digit growth in the second quarter. Gartner Dataquest analysts point out that Dell continued to sharpen its efficiency, as it achieved 9.9 percent operating expenses of revenue during its fiscal year 2002, which ended May 3. It was the lowest operating expenses of revenue in Dell's history as well as any other PC vendor.

Table 2
Preliminary U.S. PC Vendor Unit Shipment Estimates for 2Q02 (Thousands of Units)

Company	2Q02 Shipments	2Q02 Market Share (%)	2Q01 Shipments	2Q01 Market Share (%)	Growth (%)
Dell	2,925	27.7	2,526	23.7	15.8
Hewlett-Packard	1,949	18.4	2,282	21.4	-14.6
IBM	663	6.3	646	6.1	2.6
Gateway	651	6.1	798	7.5	-18.4
Apple	456	4.3	461	4.3	-1.2
Others	3,933	37.1	3,948	37.0	0.3
Total Market	10,576	100.0	10,660	100.0	-0.8

The EMEA region experienced a slight shipment decline of 0.3 percent in the quarter (see Table 3). The region was split with double-digit growth in Eastern Europe, offset by a 6 percent decline in Western Europe.

"The professional segment was the main cause of weakness in Western Europe, with many businesses continuing to postpone PC procurement. Only demand for consumer mobile PCs grew strongly in the quarter," said Brian Gammage, principal analyst for Gartner Dataquest's Computing Platforms group in Europe. "We believe there will be modest growth in the fourth quarter of 2002 in the EMEA region, but full recovery of the region's PC market is not expected until the second half of 2003."

Table 3
Preliminary EMEA PC Vendor Unit Shipment Estimates for 2Q02 (Thousands of Units)

Company	2Q02 Shipments	2Q02 Market Share (%)	2Q01 Shipments	2Q01 Market Share (%)	Growth (%)
Hewlett-Packard	1,675	19.1	1,894	21.9	-11.6
Dell	836	9.5	793	9.2	5.4
Fujitsu Siemens	560	6.4	626	7.2	-10.6
IBM	488	5.6	593	6.9	-17.8
Acer	399	4.5	299	3.5	33.3
Others	4,660	53.1	4,441	51.4	4.9
Total Market	8,617	100.0	8,646	100.0	-0.3

PC shipments in Japan dropped 12 percent in the second quarter of 2002. Asia/Pacific and Latin America showed single-digit growth rates of 5 percent and 4.3 percent, respectively.

Gartner Dataquest analysts said the excitement of the World Cup soccer tournament impacted some retail sales in Asia/Pacific, Japan and Latin America as some consumers focused on the games instead of buying PCs.

"Vendors should plan for worldwide unit shipment growth to be approximately 2 percent to 4 percent in 2002, down from our previous estimate of 5 percent growth. Vendors must capitalize on DVD drive and graphics chip technology to draw consumers to their products in the fourth quarter," Smulders said.

These results are preliminary. Final statistics will be available soon to clients of Gartner Dataquest's PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe. To subscribe to this program, please call 408-468-8000. Additional research can be found on Gartner's Hardware and Systems Focus Area on Gartner's Web site at www.gartner.com/1_researchanalysis/focus/hwmkt_fa.html.

Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry.

Gartner, Inc. is a research and advisory firm that helps more than 10,500 clients understand technology and drive business growth. Gartner's businesses consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has 4,000 associates, including 1,200 research analysts and consultants, in more than 90 locations worldwide. Fiscal 2001 revenue totaled $963 million. For more information, visit www.gartner.com.