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.

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