Dell loses market share to HP, says IDC

Round Rock (TX) - It could just be that the rest of the PC market is finally starting to catch up. But when the latest IDC Quarterly PC Tracker report showed a lower rate of growth for PC market leader Dell, with US sales growth dipping to a mere 1% annual rate for the company, the red flags were raised for traders on Wall Street. Just before lunchtime on the East Coast, Dell’s trading value on the NASDAQ fell by more than 2%, before leveling off toward the end of the day with a 1.25% loss at about $28.25 per share.

There’s definitely a momentum loss for Dell, reports IDC’s Loren Loverde and Bob O’Donnell, and it’s being picked up by Hewlett-Packard and - if you can believe it - Gateway, which could at long last use some good news. Worldwide, IDC says, the PC market is growing at a rate of 12.9% annually, but Dell’s sales growth worldwide came in at 10.2% for the quarter just ended, with sales growth for the US in particular slowing from 8% over the holiday season to an astounding 0.3% in Q1 2006. The US PC market as a whole grew at an annual rate of 5.3% in the first quarter, dragged down in large part by Dell as growth figures for HP - the world’s #2 - remained strong.

While Dell’s year-over-year growth was weighted down to just over 10%, HP shows 22.2% year over year growth, with numbers that could threaten Dell’s catbird seat if this keeps up into next year. Worldwide, Dell shipped 9.64 million PCs between January and March, or 18.1% of the global market, according to IDC’s numbers. But HP’s gains meant it shipped 8.7 million PCs worldwide in Q1. So while Dell’s market share slipped by half a point over Q1 2005, HP’s gained by 1.3% in the same period, with the gap between the two narrowed to a mere 1.7%. For the US, the numbers are equally foreboding for Dell, shipping just under 5 million units nationwide in Q1. But Dell can no longer claim a full third of the US market, with a 1.6% dip in market share year-over-year, all of that amount - and then some - usurped by HP, gaining 1.8% in US market share, with just over 3 million units shipped.

States IDC this afternoon, "It appears that [HP’s] efforts to boost volumes with channel partners are paying off."

Who else is reaping the benefits of Dell’s bad news ? Acer, which has wrested the #4 slot on the worldwide market share list away from Fujitsu, which drops to fifth. IDC attributes Acer’s rapid growth in the Americas as one reason for its success last quarter. And also in the US, the big news is the comeback of #3 Gateway, which is back to shipping over a million and a quarter units quarterly nationwide, and which regained a full 2.3% of market share (think "half an Apple") in one year, with 8.0% of the US market - a 48.2% gain year-over-year over Gateway’s dismal 2005.

Lagging slightly behind the trend - though not as badly as Dell - is Lenovo, which carries on the ThinkPad tradition started by IBM. Now that Lenovo’s numbers have normalized following its takeover of the ThinkPad brand, its growth numbers are more meaningful. Its 10.9% year-over-year growth is behind the global trend, but better than Dell. But the company’s US sales are actually declining, by just under 3% year-over-year. Lenovo remains strong in the Asia/Pacific market, but Asia/Pacific isn’t really on the hot side of its hemisphere right now. Picking up the slack from Lenovo in the US is Toshiba, which now claims the #4 slot in US market share with 4.1%, knocking Apple back to the #5 slot with a steady 3.7%.

As far as Apple is concerned, IDC attributes its flat, but steady, growth to possible supply issues emerging from the company’s shift from Power to Intel processors.

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