Dell Computer surpasses Compaq in U.S.

As expected, Dell Computer surpassed Compaq Computer to become the number one selling maker of PCs in the United States during 1999. Dell racked up an impressive fourth quarter due largely to sales over the Internet, grabbing a 16% share of the market for the year while selling over 7 million PCs. Compaq trailed with 15.7%, on sales of 6.86 million PCs. However, Compaq maintained its lead in the global market, with a 13% share; Dell was second with 10%, surpassing IBM.

Though analysts expected PC sales to fall in 1999, the market actually grew 22% last year with sales of 113 million units. Rounding out the top five domestically, Gateway grabbed the number three spot, Hewlett Packard was fourth, and IBM slid to fifth. Apple Computer continued to lose marketshare despite strong iMac and iBook sales: The company was sixth domestically and only seventh worldwide. But the overall strength of the PC market helped offset any sales gains made by Apple, which is also suffering from a lower profit-per-machine as it embraces the consumer market over the more lucrative professional graphics market. The big loser, however, was IBM, which dropped the retail presence of its Aptiva line due to slow sales.

Dell, which currently makes $30 million a day from its Web site, expects to eventually make most of its profit from the Web. Other PC makers, such as Compaq and IBM, are struggling to find a way to also reap such rewards from the Web. However, it's clear that Dell's long-term investment in direct sales has paid off: Using the Web as an extension of phone sales, Dell was able to setup an eCommerce site well before any other major PC makers