The downturn in the economy, coupled with the saturated PC market, led to only lackluster growth for the PC industry in the year 2000, according to the report by Gartner Dataquest, a research firm in Stamford, Conn.

PC sales in the United States grew from 1999 by 10.3 percent to 49.4 million units. That amounted to only half of the 21.7 percent increase in sales of the previous boom in 1999.

Worldwide PC sales, helped by strong demand in Asia and Latin America, grew by 14.5 percent to 134.8 million units in the year 2000. That growth rate also paled in comparison to the 23.3 percent worldwide increase seen in 1999, and lagged behind the 15 percent to 16 percent growth rates seen in 1997 and 1998.

Dell Computer Corp., already the clear market leader in the U.S. with a greater than 20 percent share, continued to close the gap on Compaq Computer Corp. for worldwide PC market leadership, the report showed.

Dell's worldwide sales in 2000 reached 14.5 million units, up 27 percent from 1999 for an overall market share of 10.8 percent.

By comparison, Compaq, which held a 12.8 percent share of the worldwide PC market, increased annual sales by only 8 percent from 1999, shipping 17.2 million PCs worldwide. And during the fourth quarter of 2000, Compaq's sales in the United States shrank by nearly 9 percent compared to the period a year ago.

But the fourth quarter of 2000 was tough for the entire industry as the economy decelerated. The overall growth rate in worldwide PC sales for the quarter was 10 percent, and Dell and Hewlett-Packard Co. were the only major PC vendors that exceeded the market growth rate, the report said.

Behind Compaq and Dell, Hewlett-Packard ranked third in worldwide sales with a 7.6 percent market share, followed by IBM Corp., which had a 6.8 percent share. NEC Corp. was the fifth largest worldwide vendor with a 4.3 percent market share followed by Gateway Inc., which held on to 3.8 percent of the market.

Gateway, with its market focused heavily in the United States, felt the brunt of the domestic PC slowdown in the fourth quarter. Its sales for the quarter declined by nearly 9 percent from the period a year ago. The report suggested Gateway inflicted some of its own pain by not reacting early enough to the slowdown by slashing prices or slowing production.

The vendors that could and did respond quickly to the slowdown with more competitive pricing — namely Dell and Hewlett-Packard — gained market share, the report said.

Though Apple Computer, Inc. was not listed among the world's top PC vendors, it played a role in the industry's decline, the report noted. Apple's fourth-quarter shipments fell by 50 percent in the United States and 40 percent worldwide, dragging the entire industry's U.S. sales growth rate down by almost two percentage points.