April 18, 2007 2:03 PM PDT

HP widens lead over Dell in healthy PC market

HP widens lead over Dell in healthy PC market
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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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5 comments

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HP is surely better
After seeing the price/feature/visual appeal/construction of Dell and HP laptops and PCs, I have decided to buy HP in future. Support is not stellar for either of these brands. Both of them outsource. All things being equal, I personally found that HP is more pleasing to the eye and had same or more features than Dell. My next desktop is going to be HP.
Posted by AXG (235 comments )
Reply Link Flag
Dell's Horrible Customer Service
No surprise here. Everyone who has bought anything from Dell has a horror story about their Indian customer service. Worst idea ever.
Some idiot thought he could save the company money.
Posted by Absolut187 (1 comment )
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Ditto
This is what happens when Mangers are replaced by MBA's. The
forget about service and only the squeezed dollar matters. Dell
was warned by some of its most important customers when they
were briefed about the change but it went on deaf "Rollins" ears.
The stockholders and employees deserved better than what they
were given.
Posted by georgiarat (254 comments )
Link Flag
Dell CS is bad and I get a free PC
The last 3 Dell's I have bought My last Dell, the service was so bad and when I complained, then gave me a bigger hard drive and upgrade video card just to make me keep the computer. Then when I went to reload the OS on the new hard drive, I found the CD did not have the correct driver for the modem. (I needed the modem to get to works network). After a week of sending me the incorrect CD?s found out the modem I had should not have been installed in my PC, and there was no way for them to ship the correct CD or let me download the drivers. I would need to return the system. So I return the system and got double the ram and a 17? LCD. Then the best part, I got a credit on my visa for the return, never was rebilled. When I tried to correct the situation, then CSR stated there was nothing he could do, told me to just keep the computer.
Posted by rpgile4 (1 comment )
Link Flag
Dell does not listen
I work for one of the largest software companies in the world, and probably one of Dell's largest corporate customers.

Two years ago we started seeing a major issue with Dell hardware reliability and customer service. 30% of a shipment of servers failed to boot. There were 2 models of desktops that we took off our standards list and shipped back to Dell because of numerous support issues. The product quality just isn't there any more.

As for customer service, they out-sourced it to India. When you do get a service rep you can half way understand, they don't know enough to fix the issue in just one call.

We have complained about this for years, but the words have fallen on deaf Dell ears. They are reaping what they sow.
Posted by nelsenca (1 comment )
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