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Analysts: Demystifying The HP, Dell Tie

UPDATED: HP  continued to gain PC market share at Dell's  expense, growing PC shipments 24 percent from the year-ago quarter.

That growth was good enough to help HP finish 2006 in a tie with Dell for the lead in worldwide PC shipments, according to preliminary research from Gartner and IDC.

Gartner said in a statement HP's worldwide PC market share totaled 17.4 percent for Q4; Dell's worldwide shipments plummeted 8.7 percent, giving Dell a market share of 13.9 percent.

IDC placed HP's worldwide PC market share at 18.1 percent for Q4, with Dell falling 8.4 percent to a 14.7 percent share.

While HP may have taken over the worldwide crown in Q4 shipments, Dell remained the Q4 PC shipment leader in the U.S. with a 29 percent share, Gartner said. However, Dell's Q4 U.S. shipment share fell 17.3 percent year-over-year.

Framingham, Mass.-based IDC placed Dell at a 28 percent share in the U.S. market for Q4, falling 16.7 percent.

Analysts were surprised by Dell's plunge.

IDC analyst Loren Loverde attributed a few factors for Dell's dip, including the fact that the company is focusing on profitability rather than share.

Loverde also said Dell's dedication to direct sales has meant that the computer maker has been less aggressive and less exposed to the consumer retail space, which is the fastest-growing segment.

"Now, I don't buy that they chose to give up this much share, so they either miscalculated or poorly executed in addition to the above factors, but the above outlines reasons beyond just a poor performance," Loverde told internetnews.com.

Moreover, Dell weathered a tough 2006 due to a notebook recall and questionable accounting practices that have triggered several delays in quarterly earnings reports.

HP, of course, had something to do with Dell's fall; Dell's weaknesses were HP's strengths.

"HP is doing well because it has retail through direct channels, is being aggressive in pricing and going after low-end business, and has more international volume (particularly in EMEA)," Loverde said.

"I would say that [HP's] recent success is partly due to pricing and channel strategy, significantly based on smoother operation (including CEO Mark Hurd), and part market dynamics (strong consumer, weak commercial, weak Dell)," Loverde added.

Whatever the market influences, HP's rise and Dell's decrease landed the two competitors in a virtual tie in PC shipments for 2006, with both notching a 16 percent share, Gartner found.

Overall, Gartner and IDC said worldwide PC unit shipments in the fourth quarter of 2006 were healthy.

Stamford, Conn.-based Gartner said worldwide PC shipments grew 7.4 percent for Q4 2006 from Q4 2005. IDC calculated worldwide PC shipment growth of 8.7 percent.

Gartner said worldwide PC shipments grew 9.5 percent in 2006 from 2005. The Europe, Middle East and Africa (EMEA) region continued to be the largest PC region during the year, Gartner and IDC said.

Q4 PC shipments in the U.S. decreased 3.2 percent, thanks to weaker-than-expected home desktop shipments, Gartner said. Desktop PC shipments declined more than 20 percent from Q4 2005; mobile PC shipments increased more than 20 percent, offsetting the desktop dip.

Growth could have been better; Gartner analysts said the overall PC market was impacted by competition from consumer devices such as game consoles and flat-panel TVs, as well as the pending launch of Microsoft's Vista operating system.

IDC, which put worldwide PC market growth at 10 percent for 2006, compared to 16 percent total growth for 2005, partially attributed the slowdown to the rise of portable computing devices.

IDC stopped short of claiming the impending Vista blitz had a true effect on PC shipments for Q4.