HP widens lead over Dell in healthy PC market

Hewlett-Packard is up and Dell is way down. And the growth in the market is all in the Eastern Hemisphere, analysts say.Blog: Who's the biggest PC maker ever?
Written by Michael Kanellos, Contributor
Hewlett-Packard is growing rapidly in PCs and Dell is shrinking, according to market analysts' reports released Wednesday.

HP, the No. 1 PC maker in the world, saw PC shipments rise 28.2 percent in the first quarter, compared with the same period a year ago--a boost that lifted its market share from 16.5 percent worldwide to 19.1 percent, according to IDC.

Rival Dell, meanwhile, saw shipments sink by 6.9 percent worldwide, causing its market share to contract from 18.2 percent to 15.2 percent.

Overall, the first quarter was a relatively good period for the PC market, although some manufacturers did better than others, said David Daoud, an analyst at IDC. Shipments worldwide grew 10.9 percent. Additionally, the release of Vista, the new Window operating system from Microsoft, tempered some of the usual price cutting. As a result, the industry as a whole probably saw total revenue increase over the quarter as well, Daoud said. Often, the increases in shipments are neutralized by price cuts.

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In all, 58.9 million desktops, notebooks and x86-based servers left factories in the first quarter, said IDC. Gartner, which also examines PC shipments, said shipments grew by 8.9 percent worldwide and HP saw shipments rise by 28.7 percent. Dell shipments, meanwhile, shrank by 7.8 percent. (The differences come from the two different methodologies used by the firms.)

Still, some markets were slower than others. PC shipments in the U.S. only grew by 3.6 percent, according to IDC. As a result, North America ranks third as a destination for PCs, behind the combined Europe/Middle East/Africa market and Asia.

Some PC component makers also didn't fare well in the first quarter. Advanced Micro Devices cut its revenue and profit projections for the period and Seagate Technology said Tuesday that a slowdown in desktop sales in March hurt drive makers.

The gains meant HP once again widened its lead over Dell, which has been hammered over the past two years by customer service complaints, slow sales growth among U.S. business customers (a Dell mainstay), and changes in management. A year ago at this time, Dell was the No. 1 PC maker, but was showing signs of slowing down.

Dell has actually taken actions to improve customer service, but it will take more time for the reputation the company earned for less-than-stellar customer service to dissipate, according to Daoud.

Besides benefiting from Dell's missteps, HP has managed to gain market share by having a more diversified channel strategy, said Daoud. HP sells PCs and servers directly to large customers, such as Dell, but also sells many PCs to consumers through retail stores, and a lot of customers are still more comfortable with buying PC in stores. HP also revamped its PC organization a few years ago, a process Dell is just now undergoing.

"They (HP) are also sort of reaping the benefit from the past two to three years of restructuring," he said.

Acer also moved tantalizingly close to its goal of overtaking Lenovo for the No. 3 spot in PCs. Both companies now have a 6.7 percent market share. Acer, however, saw shipments grow by 41.4 percent while Lenovo grew by 17.4 percent. Acer has been the fastest-growing PC maker for the past several years.

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