Consumer Caution Working to Slow PC Sales in U.S.

SAN JOSE —  In an ominous sign for PC vendors, U.S. sales of desktop computers have slowed sharply in the last three months as corporate customers debate whether to upgrade and consumers ponder the need for expensive replacements.

Although quarterly data from research firms Dataquest and IDC differed by several percentage points on an increase in worldwide sales, both firms’ data suggested U.S. sales continue to drag as relatively cheap, powerful PCs saturate the market.

“Demand is still there, but we’re not seeing the volume that we saw last year at this time,” said analyst Anne Bui, whose firm IDC said worldwide shipments rose to 30.1 million, a 14.5% increase. Of that number, computer manufacturers shipped 11.7 million units, up only 7.5%.

“Consumers are befuddled about all the bells and whistles being offered and haven’t been given a clear message about why they would need to replace their PC,” said Bui.

On the corporate side, sales have slowed as many companies delay purchases while deciding whether to upgrade to any of several Windows 2000 product offerings coming this year from Microsoft Corp., said Dataquest analyst Charles Smulders.

“We’ve advised clients to take a cautious approach and fully test a new version of an operating system before deploying,” Smulders said. “As a result, we expect Windows 2000 buying won’t have a significant impact on [PC sales] growth and upgrades until the fourth quarter of the year.”

Dataquest found worldwide shipments rose 18% to 31.6 million units amid strong sales in Asia-Pacific and Japan as businesses and consumers rushed to catch up on the Internet phenomena in their recovering economies. U.S. sales rose by 11.7 million units, up 11.5%--the smallest quarterly gain in more than two years.