Dell storms to number 2 and threatens 'King Compaq'

The direct model - that is selling direct to your customers without a middle man - used by Dell, now widely accepted as the muscle behind Michael Dell's vision, has knocked IBM off its number two spot in Europe, and according to Gartner/Dataquest analysts, is now threatening the mighty Compaq at the top.

The direct model - that is selling direct to your customers without a middle man - used by Dell, now widely accepted as the muscle behind Michael Dell's vision, has knocked IBM off its number two spot in Europe, and according to Gartner/Dataquest analysts, is now threatening the mighty Compaq at the top.

Dell's growth, a staggering 79 percent quarter on quarter, trounced the "lacklustre" IBM which could only manage nine percent growth during the Q2 period, prompting scathing comment about Big Blue's failure to keep up in the fast lane of high tech manufacture. "It's (IBM) just not moving fast enough," says Dataquest analyst Chris Jones who was part of the team that put the European report together. "In just about every scenario IBM has shown itself to be slow to react," says Jones.

IBM's dawdling may be indicative of a pervasive weakness in upper management according to Jones who doesn't believe the company can make a come back any time soon: "Slipping to number three, it's going to be very difficult to catch up with a company like Dell. Plus the fact that the likes of Siemens and HP will be working hard on their own market share, it doesn't look to me like IBM will make a quick recovery."

IBM's Steve Pavlik EMEA director of desktop products identified the desktop brand as "the problem child" in IBM's family of products and did not try to counter Dataquest's assertions. "We're doing great with our servers and our notebooks but our desktops just aren't doing enough." Of the criticisms voiced by Jones, Pavlik remains optimistic: "Describing us as slow to respond is a fair criticism. Obviously these sort of results need action but I'm absolutely certain that neither Dell or Compaq have better products than IBM. Our products are solid."

Dell's sprint to the top was always likely to affect IBM, which has been a continuous source of disappointment to the Dataquest team for some time now. But, says Jones, Compaq, the once untouchable force in desktop computing is looking increasingly susceptible to Dell's steroid like growth. "18 months ago" says Jones, "Compaq needed to look out for Dell in the US corporate market which it has now lost. We believe it's going to be hard for Compaq to keep Dell from taking the number 1 spot (in Europe)."

Reaction from the Compaq camp was swift. Werber Koepf, VP Compaq general business group says he can "sleep very well with this sort of forecast" pointing to his company's impressive sales record for the quarter. "We shipped far more units than the number two company and are not likely to lose any share." Indeed Dataquest figures indicate Compaq's market share has grown to 15.5 percent percent - it's highest ever share in Europe.

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