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By Michael Kanellos, 16 July 2004 09:00

NEWS A strong euro helped PC shipments grow in double digits in the second quarter - and the future for the market remains somewhat positive, according to two analyst firms.

Despite worries about a slowing tech market, consumers and businesses continued to snap up PCs. Worldwide shipments of desktops, notebooks and servers with x86 chips grew by 13.3 per cent over the same period a year ago and by 11.4 per cent in the United States, according to research firm Gartner.

Rival IDC said worldwide shipments grew by 15.5 per cent and by 10.9 per cent in the United States. The differences between the figures arise in part from the different methodologies used by the firms. Both analyst firms stated that Dell remained No. 1 worldwide and strengthened its lead over No. 2 Hewlett-Packard.

Charles Smulders, an analyst at Gartner, said: "We have seen none of the shortfalls in demand seen in other sectors of the IT market."

Europe fueled the market with a fourth consecutive quarter of shipment growth rates of nearly 20 per cent. The growth was due in part to strong currency and a business upgrade cycle.

As a result, companies that concentrate on the continent grew faster than rivals that don't. Acer, now the fifth-largest PC maker worldwide, saw shipments grow by more than 30 per cent, according to both Gartner and IDC. Fujitsu Siemens, the fourth-largest PC maker in the world and formerly one of the slower-growing large companies, grew by more than 19 per cent.

Loren Loverde, an analyst at IDC, said: "The US is a difficult market for them (Acer) because they don't have the cachet they once had, but in Europe, they have found a nice match of aggressive pricing and promotions in the channels that is moving boxes."

Declining prices, however, also help push sales, which means that revenue won't grow nearly as fast as shipment rates. Notebook shipments slowed slightly from the first to the second quarter, which should depress overall revenue. In 2003, PC shipments grew by about 12 per cent over 2002, but overall revenue was roughly equal at $175bn.

Partly as a result, the outlook for PC shipments isn't unabashedly positive.

"The expectations of the industry have mellowed a little in the last couple of months," Smulders said.

PC shipments in the second half will likely increase in numbers, but the percentage gains from shipments a year ago may actually decrease. The third quarter last year was better than the second quarter, so the comparison will be more difficult. PC shipments are expected to increase by only 11 per cent to 12 per cent in the second half, according to Loverde. Still, IDC expects shipments to grow in double-digit figures in 2004 and 2005.

Dell also continued to expand its lead on rival HP. Dell now holds 18.3 per cent of the worldwide market, a 22.5 per cent increase over its share of 17.2 per cent for the same period last year, and 32.9 per cent of the US market, according to IDC. HP has 15.7 per cent of the worldwide market, the same share it had a year ago, and 19.3 per cent in the United States.

Dell grew faster than HP in both the world and US markets. HP, however, is more heavily concentrated in retail, so it could still forge a comeback in the fourth quarter. But IDC's Loverde warned that it won't be easy.

"HP could edge them, but the momentum seems to be with Dell," he said.

Michael Kanellos writes for CNET News.com