IDC: Public-sector PC market weak but expanding

Personal computer shipments to the public-sector market grew almost 35 percent from the first quarter to the second quarter of 2003, hitting 2.4 million units. The value of the shipments grew to about $2.7 billion, up almost 27 percent from the first to second quarter, according to a new report by market research firm IDC.

Despite the steep increase in shipments quarter-over-quarter, the public-sector market is showing signs of weakness, according to IDC's report. From a year-over-year perspective, unit shipments increased by 2.2 percent; spending decreased by 10.7 percent.

"There are worrisome signs of a market that could turn negative in 2004, and possibly sooner," David Daoud, senior analyst at IDC. "The year-over-year growth rates have decelerated to the low single-digits over the past four quarters, and an aggressive pricing environment has resulted in shrinking revenues from this market."

The public-sector market studied by Framingham, Mass.-based IDC includes the federal government, state and local governments and elementary, secondary and higher education institutions.

The federal, state and local government segment ended the second quarter with single-digit growth. Its year-over-year customer spending rate fell 4.9 percent, reflecting continued price cuts, according to IDC.

The federal government is benefiting from increased funding, particularly in the Defense Department and federal agencies in charge of law enforcement and homeland security. State and local government budget shortfalls are likely to hurt PC market growth for the foreseeable future, according to the report.

The education market grew above historical rates quarter-over-quarter, but unit sales were slow year-over-year, and the value of those sales declined, the report said.

Dell Inc. of Round Rock, Texas, Apple Computer Inc. of Cupertino, Calif., and Gateway Inc. of Poway, Calif., all improved their shares of the public-sector market.

Dell maintained its overall leadership, while Apple captured the No. 1 spot in the portable PC market in the education sector.

Gateway's focus on pricing helped it make inroads in the education market, while Dell's sales increased because of its global offering of products, services, applications and support, according to IDC.