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. Last Updated: 07/27/2016

Study: PCs No Deal in Europe

MONTE CARLO -- European personal computer buyers are getting a raw deal compared with their U.S. counterparts, paying up to one third more than Americans for the same product, according to information technology consultancy IDG Group.

Before taxes, prices in Europe are on average 23 percent higher than in the United States for the same machine. After taxes, the figure soars to 34 percent, said IDG senior director Simon Pearce, quoting figures for Britain and the United States.

Pearce said the comparisons were based on the price of a mid-range Compaq Presario, which costs just over $2,000 in the United States. The corresponding figure in Britain is equivalent to slightly more than $2,500, reflecting such factors as higher employment costs. After taxes, the figures increase to about $2,200 in the United States and about $3,000 in Britain.

Despite high prices and poor first- quarter figures, personal computer sales in Western Europe will continue to show good growth in 1996, Pearce said.

In a presentation to an IDG-sponsored conference, Pearce said profit margins of the major PC manufacturers were being pressured by a vicious circle of unrealistically high sales projections, leading to excess production and an overhang of PC models, which quickly become obsolete because of the rate of change in the industry.

"Some models that have the attraction of say, a BMW 7 series [a luxury car] one year, become the equivalent of a Ford Escort [a mid-range family car] the next," said Pearce.

He said Western Europe's PC sales will hit 6.4 million in 1996, up from 5.4 million in 1995.

"We will see good growth continuing in the Western Europe PC market. This will inevitably be patchy toward the year 2000, but sales then should be approximately 10 million," Pearce said in an interview.

PC sales rose 13.2 percent in the first quarter of 1996, according to data released today from London information technology market researcher Context.

This was slower than the industry had forecast and compared with growth of almost 30 percent in the same period last year.

Germany, the biggest market, was particularly disappointing. German sales rose 6 percent in the first quarter, France's were up 9.7 percent, while Britain led the way with a 22 percent increase.

"In general, demand for PCs in Europe has not been as strong as expected, especially after the relatively modest growth in the last quarter of last year," Context said in a statement.

"This has forced computer manufacturers to sacrifice margins and cut prices to clear stocks," Context said.

Pearce says this price-slashing reflects overly optimistic sales projections that come back to haunt the computer manufacturers.

"Some of these expectations are completely unrealistic, leading to a glut of equipment, which devalues the whole market," Pearce said.

According to the latest figures from Context, the winners in the desperate scramble for market share are currently Hewlett Packard, with 25 percent first-quarter sales growth, raising its market share 0.5 points to 5.1 percent; Siemens Nixdorf, with 30.7 percent growth, 0.7 point market share increase to 5.4 percent; Packard Bell, with 34.4 percent, plus 0.4 to 2.4 percent; and Toshiba, with 47.5 percent, plus 0.7 to 3.2 percent.

Apple Computer, AST and ICL lost market share.

Shaky International Business Machines Corp appears to have stabilized its share at 9.3 percent, according to Context.

Market leader Compaq Computer, with almost 13 percent of the market, had a flat quarter.

Context senior research analyst Emmanuel Lalloz expects the European market to grow by 16 percent in 1996, a significant reduction from 1995.