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The Top Global OEMs
ESM ranks the world's leading electronics and industrial manufacturers
The golden idol has feet of clay, after all. For much of the 1990s and into the early part of this decade, Dell Inc. was a darling on Wall Street, its Round Rock, Texas, headquarters a magnet for manufacturing executives seeking to mimic its much-admired supply chain efficiencies.
The computer and communications equipment company isn't shining so brightly nowadays, and analysts are starting to question Dell's ability to maintain the breakneck growth rate that catapulted the 22-year-old company into the top five on Electronics Supply & Manufacturing's annual ranking of the world's biggest electronics OEMs.
"Dell experienced particular weakness in the United States, with a 7 percent decline" in computer shipments during the third quarter, Richard Farmer, an analyst at Merrill Lynch & Co. Inc. (New York), wrote in a report on the company's latest performance. "We suspect elasticity may be causing Dell's unit rate to slow as it takes a less aggressive price stance in certain markets."
Why is the electronics world fascinated by Dell's stumble? The reason is simple. The computer market, despite concerns about demand saturation in certain geographies and the consequent slowdown in revenue growth, is by far still the biggest slice of the electronics pie.
In 2005, for instance, the world's top 50 electronics OEMs posted collective revenues of about $1 trillion. Computer sales accounted for approximately 61 percent, or $632 billion, of that amount. Throw in computer peripherals ($97.9 billion), and the sector's share jumps to 70 percent of the top 50 electronics OEMs' sales.
The communications equipment sector came in a distant second, with revenues of $203.9 billion, or 20 percent of the top 50's overall revenues.
If Dell's corrective actions fail, its suppliers could get badly hurt, while rivals like Hewlett-Packard Co. would improve their competitive positions, according to analysts. That is already happening. In the third quarter, HP caught up with Dell in worldwide PC unit shipments. The two companies each accounted for 17.2 percent of global PC sales, down for Dell (from 19.1 percent in the third quarter of 2005) and up for HP (from 16 percent in the comparable year-ago quarter).
A slightly different but equally significant change is occurring in the industrial OEM market, where the automotive sector is struggling as growth accelerates in other industrial sectors.
Of the 10 industrial OEM sectors tracked by ESM, only two--motor vehicles and engines, and appliances--recorded a year-over-year drop in 2005 revenues. And while the automotive sector still dominates the industrial OEM market, the landscape is shifting rapidly as growth accelerates in the diversified, aerospace and machinery sectors.
Still, the automotive market continues to command the lion's share of the world industrial market, with total top-50 revenues in 2005 of $1.5 trillion. That's 60 percent of the $2.6 billion total, down slightly from $1.6 billion in 2004.
In 2005, General Motors Corp., DaimlerChrysler AG, Ford Motor Corp. and Toyota Motor Corp. led the ranking of the top-50 industrial OEMs. Observers expect Toyota to vault into the No. 1 or No. 2 position by the end of 2006.
Toyota's revenue rose 5.6 percent, to $172.8 billion, in 2005, from $163.6 billion in 2004, while Ford's increased a more modest, 3.2 percent, to $177.1 billion from $171.7 billion. Both General Motors and DaimlerChrysler recorded negative revenue growth rates, of 0.5 percent and 7.9 percent, respectively.
Bolaji Ojo can be reached at bojo@cmp.com.
Top Global OEMs
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