The Perils of Market Share

on May 24, 2013

If you’re on this site, you probably know we have had a lively debate going on for the past couple of days about the meaning and value of market share in the smartphone market. I thought it might be valuable to fire up the time machine and go back to look at some past winners in PC market share.

Let’s take a look at 1996, the first full year of Windows 95 availability and pretty much the peak of Windows PC dominance. The worldwide market share leader, according to Gartner data dredged up by Wikipedia, was Compaq, at 10%. In fact, Compaq led every year between 1996 and 200 with its share peaking just short of 14% in 1998. IBM held second place at 8.6%. Packard Bell NEC was third at 6%. Apple was a close fourth at 5.9%. And HOP rounded out the top five.

What has happened to each of these players? Compaq was acquired by HP in 2002 in a deal from which the company has never quite recovered. (HP has been entrenched at No. 1 for the past six mostly profitless years.) IBM sold its PC business to Lenovo which, after several years of struggle, today is the only big PC player whose sales volume is growing. Packard-Bell ended up as an entry-level brand for Acer in Europe while NEC is a small player in Asian markets. And Apple, which nearly died in 1997, now dominantes very profitable high-end computer sales, especially in the U.S., though it has never returned to the worldwide top five.  Dell, which dominated the business in the early 2000s, entered the top five in 1997 and Acer first made it in 2005.

Whatever hardware market share is good for, it doesn’t seem to translate into long-term dominance. Sic transit gloria mundi.