PC shipments up, but Dell loses ground

Dell could be losing its shine.

PC shipments increased by 13.1 percent in the first quarter, according to research firm Gartner, thanks in part to sales in emerging markets and to consumers. Overall, 57 million PCs, notebooks and servers based on so-called x86 chips were sent to customers. Rival IDC came up with similar results and rankings although the exact numbers are slightly different.

But Dell, the No. 1 PC maker in the world and in the U.S., did not grow that fast. The Round Rock, Texas-based PC maker saw shipments rise worldwide by 10.2 percent from the first quarter of 2005, resulting in a decline in market share from 16.9 percent to 16.5 percent.

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In the U.S., Dell saw shipments rise by only 0.2 percent when the overall market grew by 7.4 percent, dropping its market share from 32 percent to 29.8 percent.

It's a significant change because Dell has grown faster--and generally by a substantial margin--than the PC market as a whole for several years. The company hasn't seen shipments grow this slowly since the third quarter of 2001, when the rest of the industry was contracting.

Gartner's Charles Smulders combed through the data and found that Dell has grown faster than the market on an annual basis since 1989. Dell might have grown faster than the market before that, but Gartner doesn't have the numbers.

"It is a pretty interesting point that they have reached," Smulders said. "They are challenged in delivering to their profitability expectations and with the current consumer pricing environment. It is because they are focused on Intel while other competitors have adopted AMD and been able to hit lower price points."

Dell also has tried to stay out of the low end of the PC market, which helps explain why the average selling price for Dell consumer PCs in the U.S. is far higher than the average price of PCs from competitors. The company also has suffered from an increase in customer complaints.

Rival Hewlett-Packard, meanwhile, is staging a comeback. HP grew shipments by 22.3 percent compared with the same period the year before. As a result, its worldwide market share grew from 13.8 percent in the first quarter of 2005 to 14.9 percent in the first quarter of 2006. In the U.S., HP grew shipments by 15.3 percent and saw its market share rise to 18.5 percent.

Dell has also tried to stay out of the low-end of the PC market, which helps explain why the average selling price for Dell consumer PCs in the U.S. is far higher than the average price of PCs from competitors. Dell has also suffered from an increase in customer complaints.

No. 4 Acer continued to wield the crown for the fastest-growing PC maker. The Taiwanese manufacturer grew PC shipments 45 percent in the first quarter and now has 5 percent of the world market. Lenovo is ranked third, with 6 percent of the market. Lenovo grew shipments by 10 percent.

Gartner further added that, in processors, Advanced Micro Devices gained market share over Intel in the last seven quarters.

Apple Computer so far hasn't been a boon to Intel. Apple, ranked fifth in the U.S. but not in the top five worldwide, saw its U.S. market share decline from 3.6 percent to 3.5 percent. Apple's worldwide share is around 2.3 percent.

[open-mind]

The Chipmaker?

||
Apple Computer so far hasn't been a boon to Intel. The chipmaker,
ranked fifth in the U.S. but not in the top five worldwide, saw its
U.S. market share decline from 3.6 percent to 3.5 percent.
||

Is Apple now a chipmaker?

Or does Intel have 3.5% market share?

[ibookjournalist]

Is that last paragraph correct?

It says Intel is the fifth largest chipmaker in the U.S. but not
worldwide. Is its marketshare really only 3.5 percent? Or was that
suppose to be Apple's figures in the U.S.?

[pilaa]

Data Clarification

I believe those figures were related to Apple's worldwide marketshare and Apple's effect on Intel which concludes that Apple is 5th in the U.S. with regard to demand for Intel chips...

[J.G.]

Apple data not valid

Or, as others have suggested, maybe it is misreported here. Since
most of Apple's computers still have Power PC chips, we need to
see combined sales figures for PPCs and Mactels. The highest
figure I've read for current Mac market share in the U.S. is about
five percent. Worldwide? Less than three percent.

[wnurse]

hello

Just because the figures aren't broken out by processor does not make it invalid.

[john55440]

HP vs Dell - Initial Purchase

At the consumer level:

With HP, you can pick up your computer at a local retailer, so you know that you get what you want/ordered.

With Dell, your order can get screwed up, and if it does, you have to go round and round with some guy in India.

[Erigami]

The main reason is clear

Dell does not sell AMD. At the time, when AMD is a performance leader in desktop PCs and servers, is does not look wise...

The other reasons: (1) many years Dell did not have competition from HP in direct sales. Now HP has caught up providing full customization options. (2) Dell makes a bit bulky notebooks, which are not so attractive to consumers. HP traditionally makes smaller devices.

==
check website accessibility, privacy, quality: http://checkwebsite.erigami.com/accessibility.html

[bradyme]

Throw away PC market Bah!

Small mainboards without simple components like a no agp slots on the demention series computers to make a cheap $399.00 PC is just a jip!

Short changing a customer and then promoting it as quality is crap!

[KsprayDad]

Wow

I guess whatever computer you have, with all those fancy parts including AGP, still didn't bother to include spell check.

For the basic tasks that the VAST majority of people use their PC for, a $399 one will do just fine.

Not everyone out there is buying a gaming machine. (And if you do want one...guess who owns Alienware...D'OH!)

[fred dunn]

Stand your Ground Michael...Don't sell AMD...

You go boy. We are all impressed by your conviction that Intel is the only supplier for Dell. (read "Intel owns Michael's soul")
I'm sure your investors appreciate the strides your company has been making in gaining market share. (read: "your investors don't see you as the 'golden boy' anymore and are starting to question your wisdom")
But even with the roller-coaster of market share figures one thing stand out about Dell, their end-user support. (read: "Since Dell users have to just about drive to India to get support your repeat buyers are starting to go away")
We are behind you and know that AMD technology is inferior and not up to Dell standards. (read: "Dells CTO is asleep at the wheel because your engineers know that the current AMD technology is FAR superior to Intels. But a superior computer is not what Dell is about is it? No, Dell is about 'consistency' just like McDonalds. So I guess you could say that Dell has become the McDonalds of the computer industry")

Hopefully Michael of someone from Dell will pick up on the subtle and subliminal thoughts expressed within this post, but if not....

I'll take some fries with that Demention and could you super-size my soda?

[KsprayDad]

McDonalds

is a pretty damn sucessful company.

[Razzl]

Bring back Steven...

Successful ad campaigns are a once-a-generation miracle that can make or break a company for a long time. Dell's gen-x "Steven" character was one of the most successful ad campaigns ever for a computer company but Dell pulled the plug because the actor (who, let's face it, WAS "Steven") got caught with pot at his college dorm.

I'll bet there will be a lot of people at Dell who wish Steven hadn't been shown the door so fast. Dell has made the "Boston Chicken" error (throwing away great brand advertising without a better idea as backup) and is beginning the long slide into oblivion that nature imposes on the boring...

[BasharTeg]

Double paragraph?

You know this paragraph is in the article twice right?

Dell has also tried to stay out of the low-end of the PC market, which helps explain why the average selling price for Dell consumer PCs in the U.S. is far higher than the average price of PCs from competitors. Dell has also suffered from an increase in customer complaints.

[Perno13]

I saw that too

Good catch. Even better editors!