Price Cuts Boost PC Sales in 3rd Quarter

Personal computer sales grew strongly in the third quarter, and Compaq Computer Corp. and Dell Computer Corp. were the big winners in a price war that left rival vendors smarting, two business research firms reported Sunday.

Overall industry sales in the U.S. grew at least 20% in the third quarter, buoyed by the top two PC sellers, Dataquest Inc. and International Data Corp. said in separate reports. Global sales rose only 16% partly due to weakness in Japan’s economy.

But IBM Corp., which didn’t lower its prices in time to catch the buying trend, posted only single-digit growth and fell out of the top-three tier in U.S. sales. Its U.S. sales rose only 8.6%, Dataquest said, or 6%, IDC said.

“IBM completely missed the boat on the low-cost market,” said Kevin Hause, an analyst at the Mountain View, Calif.-based IDC.

Compaq posted more than 60% gains in U.S. sales in the quarter, and Dell’s sales rose by up to 74%.

Hewlett-Packard Corp. also benefited from similar sharp price cuts, with PC sales surging at least 70%.

Apple Computer Inc. fared worse. The one-time PC pioneer, which ranked No. 4 a year ago, wasn’t among the top five makers as businesses and schools turned away from the troubled seller of Macintoshes. The research firms didn’t have sales figures.

Instead, customers flocked to new inexpensive machines--full-featured consumer PCs now cost less than $1,000--and new multimedia technology that improves, for example, how graphics look. Also credited was a booming economy that gave extra spending money to businesses and consumers.

Looking ahead, the forecast calls for further strength in computer sales as consumers continue to flock to cheaper PCs.

“Our outlook for the fourth quarter is fairly bright. Demand continues to look good in Western Europe and superb in the U.S.,” Hause said.