PCs Are A Tough Sell For Nearly Everyone But Dell Consolidation Expected Some analysts wonder why so many companies stay in a market so unforgiving.(INTERNET & TECHNOLOGY)

Byline: PATRICK SEITZ

Only Dell Computer Corp. has thrived during the downturn in personal computer sales, leading analysts to wonder why some PC vendors even stay in the business.

Dell is making a profit on PC sales while major rivals are losing money. The world's No. 1 PC vendor is continuing to increase its market share with aggressive pricing. It has cut profit margins and used the efficiencies of its direct-sales, build-to-order business model to hurt competitors.

Still, Dell has made its market share gains while the overall industry is shrinking. PC sales worldwide fell for the first time ever in 2001. And business isn't expected to pick up until mid-2002.

Market researcher International Data Corp. estimates that PC shipments worldwide will fall 6.2% in 2001 from 2000. IDC forecasts a slim 2.1% rise in PC shipments this year as companies begin replacing machines they bought three or four years ago during the Y2K frenzy. In 2003, PC shipments could rise nearly 12% if the pent-up demand is released, IDC notes.

The economic slowdown and uncertainties related to terrorism and the U.S. war in Afghanistan have stalled big customers' plans to upgrade computer gear, says Martin Reynolds, an analyst with researcher Gartner Inc.

"We're looking for some pretty strong growth in 2003, possibly even double-digit again," Reynolds said. PC makers will be "dancing in the streets" from the big boost, but it won't last, he says. The PC industry is in for a "roller coaster ride over the next four or five years," he said.