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PC Market Approaches 11% Growth

Total shipments rose 10.9% year on year in the first quarter to 46.1 million, roughly 1% above forecast. Continued growth in EMEA and in portable PCs were the primary drivers.

“First quarter results demonstrate that demand remains healthy going into the new year,” said Loren Loverde, director of IDC’s Worldwide Quarterly PC Tracker. “Although the market is expected to slow later this year, demand for portables, system replacements, and growth in emerging geographies continue to drive expansion.”

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“Outside the United States, a weakening dollar helped create market momentum, as strong international currencies, particularly the Euro, made dollar-denominated purchases attractive,” said Roger Kay, vice president of Client Computing at IDC. “Despite U.S. shipment results beating forecast slightly, the second half remains clouded, as macroeconomic indicators continue to be mostly negative.”

Regional Outlook

— United States – Following a strong fourth quarter, the U.S. market was in line with forecasts, showing strong growth in portable PC shipments and small and medium business sectors.

— EMEA – Demand for portable PCs continued to fuel growth in EMEA boosting total shipments by over 15% year on year. Consumer demand appeared relatively strong while commercial growth was in line with expectations.

Vendor Highlights

— Dell – Dell remained the top vendor worldwide, expanding its lead with worldwide growth of over 13% year on year. International shipments increased by more than 21%, and portable PCs made continued gains.

— HP – HP had a solid quarter, gaining share internationally with year-on-year growth of more than 15%. HP’s worldwide growth was in line with the market.

— IBM – IBM had a relatively slow quarter with growth of 2% trailing double-digit growth in prior quarters. Strong notebook growth pushed portable PCs to nearly 48% of IBM’s client PC shipment mix, an increase of several points.

— Gateway – Following a fourth quarter gain, combined Gateway and eMachines shipments declined more than 20% year on year in the first quarter. The slowdown reflects continued challenges for Gateway following the acquisition of eMachines, despite significantly expanding its channel network.

— Toshiba – Toshiba had another solid quarter, benefiting from growing portable adoption, but managing remarkably strong sales in the United States.

— Apple – Apple had another very strong quarter with growth of more than 43%. Aside from the company’s clear ability to leverage the success of its music and iPod business to gain traction in the PC market, the iMac mini was a key factor in Apple’s 1Q05 unit growth.

Top 3 Vendors, Worldwide PC Shipments, First Quarter 2005(Preliminary)(Units Shipments are in thousands)  Q1 2005              Q1 2005    Market   Q1 2004  Market    Growth   Rank    Vendor     Shipments   Share   Shipments  Share  2005/2004----------------------------------------------------------------------    1      Dell           8,727     18.9%    7,682    18.5%      13.6%    2      HP             7,110     15.4%    6,431    15.4%      10.6%    3      IBM            2,335      5.1%    2,290     5.5%       2.0%           Others        27,996     60.6%   25,223    60.6%      11.0%           All Vendors   46,167    100.0%   41,626   100.0%      10.9%

Notes:

— Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.

— PCs includes Desktop, Notebook, Ultra Portable, and x86 Servers.

— PCs do not include handhelds. Data for all vendors are reported for calendar periods.

— IBM Client PC shipments will be tracked under the Lenovo name once the sale of IBM’s PC division is legally completed.

Source: IDC, April 14, 2005

Top 5 Vendors, U.S. PC Shipments, First Quarter 2005 (Preliminary)(Units Shipments are in thousands) Q1 2005                   Q1 2005  Market  Q1 2004  Market   Growth   Rank   Vendor          Shipments Share  Shipments Share  2005/2004----------------------------------------------------------------------    1     Dell               4,976   34.0%    4,590   33.4%       8.4%    2     HP                 2,658   18.2%    2,567   18.7%       3.6%    3     Gateway              830    5.7%      422    3.1%      96.5%    4     IBM                  627    4.3%      615    4.5%       2.0%    5     Toshiba              509    3.5%      333    2.4%      52.8%          Others             5,020   34.3%    5,207   37.9%      -3.6%          All Vendors       14,620  100.0%   13,734  100.0%       6.5%    3     Gateway (Merged)     830    5.7%    1,080    7.9%     -23.1%
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