ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, March 19, 1996 TAG: 9603190081
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
The personal computer industry's heady sales growth among American consumers has ended, a leading research group said in a sobering study released Monday.
The report by Dataquest, which tracks trends in computer hardware and software, also startlingly suggested that PCs won't be used in most U.S. homes by the end of this decade and raised questions about whether such a goal may ever be reached.
Though PC industry executives have said it would be impossible to sustain sales growth that has been as high as 40 percent in the past few years, some were surprised that Dataquest's forecast was so dramatically lower.
``We frankly don't see that,'' said Sean Burke, director of consumer marketing at Compaq Computer Corp., the largest maker of PCs.
Hewlett-Packard Co., which rocketed into the PC consumer market last year, also thinks the study does not align with its research, spokesman Larry Sennett said. But he added that HP does expect a consolidation among major manufacturers, which would be a sign of slower industry growth overall.
Executives from Acer America Corp. and IBM Corp. said their research had found consumer sales slowing but not at the rate Dataquest suggested. They raised questions about some of Dataquest's assumptions, such as the five-year frequency at which families buy new PCs. The makers think families update every three or four years.
Dataquest said growth of PC sales in the U.S. consumer market, which reached 42 percent in 1994 and 22 percent last year, will ease to 7.6 percent this year and less than 1 percent in 1997. In 1998, the group forecast a sales decline of 2.3 percent among U.S. consumers.
The overall PC industry will grow more strongly because of expanding markets overseas. But sales growth to U.S. businesses, educational institutions and government agencies has already slowed. That market is now shaped by broader economic conditions instead of the prospect that PCs can offer some new value to a work process.
Dataquest's survey of 10,000 U.S. households found 29 percent had at least one PC at the end of 1995. It projected that number will jump to 32.6 percent by the end of this year but reach just 38 percent by the end of the decade.
``We are running out of households that can afford to buy new PCs,'' said Scott Miller, analyst at Dataquest, which is based in San Jose, Calif. A key reason is the industry's inability to reach lower-income households with less pricey machines, he said.
PCs are found in just 12 percent of households with less than $30,000 in annual income. That is up just slightly from 10 percent in a similar survey Dataquest performed 10 years ago.
The economic underpinning of the PC business is based on machines that cost $1,500 to $3,000, enough to sustain development of faster microprocessors and pay for extra memory that will run multimedia software and facilitate new Internet-delivered programs.
Without a change in that equation, which is unlikely, it will be hard to expand the base of users in lower-income households.
LENGTH: Medium: 62 linesby CNB